Other-Special Court [Sec. 236]

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

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 »

Whether a Resolution Professional is a public servant or not and thus, would be liable for the offence punishable under Prevention of Corruption Act? – Dr. Arun Mohan v. Central Bureau of Investigation – Delhi High Court

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Whether a Resolution Professional is a public servant or not and thus, would be liable for the offence punishable under Prevention of Corruption Act? – Dr. Arun Mohan v. Central Bureau of Investigation – Delhi High Court Read Post »

The fine imposed by NCLT on non-cooperation by Ex-management u/s 19(2) or 34(3) of IBC is covered in ‘penalty” and not ‘cost” under Rule 149 of NCLT, and it is required to be dealt under Section 70 and 236 of the Code which is not within jurisdiction of Adjudicating Authority – Rakesh Gupta Vs. Mahesh Bansal Erstwhile RP of Gupta Marriage Halls Pvt. Ltd. – NCLAT New Delhi

In this case, in IA u/s 19(2) and further in 34(3), the Adjudicating Authority imposed a fine of Rs. 5 lacs on the Appellants.
The RP/Liquidator has argued that Adjudicating Authority only imposed the cost and not the fine.
NCLAT held that we cannot accept that the word “fine” and the cost to be synonyms. we are clear that the intent and legal basis of cost is different from intent and legal basis of penalty which includes “fine”. Therefore, we do not have any hesitation in holding that the word “fine”, used consciously by the Adjudicating Authority in the Impugned Order, is covered in penalty which is required to be dealt under Section 70 and 236 of the Code and which further is not within jurisdiction of the Adjudicating Authority.

The fine imposed by NCLT on non-cooperation by Ex-management u/s 19(2) or 34(3) of IBC is covered in ‘penalty” and not ‘cost” under Rule 149 of NCLT, and it is required to be dealt under Section 70 and 236 of the Code which is not within jurisdiction of Adjudicating Authority – Rakesh Gupta Vs. Mahesh Bansal Erstwhile RP of Gupta Marriage Halls Pvt. Ltd. – NCLAT New Delhi Read Post »

Power of NCLT to impose a penalty u/s 70 of IBC on non-cooperation by Suspended Directors u/s 19 of IBC – Mr. Rahul Gupta Vs. Chandra Prakash (Erstwhile RP) Now Liquidator of Gem Batteries Pvt. Ltd. – NCLAT New Delhi

In this case, NCLT imposed a cost of Rs. 10,00,000/- each on Members of the Suspended Board of Directors under Section 70 of the Code on failed to extend cooperation to the Liquidator.
Hon’ble NCLAT, after careful perusal of six judgments on earlier occasions, concluded that clearly the Adjudicating Authority erred in passing the Impugned Order overlooking the law of the land (the Code) and also ignoring the precedent cases settled by this Appellate Tribunal, as discussed in preceding paragraphs.

Power of NCLT to impose a penalty u/s 70 of IBC on non-cooperation by Suspended Directors u/s 19 of IBC – Mr. Rahul Gupta Vs. Chandra Prakash (Erstwhile RP) Now Liquidator of Gem Batteries Pvt. Ltd. – NCLAT New Delhi Read Post »

Initiation of proceeding u/s 14B & 7Q of EPF Act 1952 after Corporate Debtor admitted into CIRP is an offence punishable u/s 74(2) of IBC, NCLT grants liberty to Liquidator to approach IBBI to proceed against EPFO’s erred officials in this regard – Regional Provident Fund Commissioner Vs. Excel Glass Ltd. (Under Liquidation) – NCLT Kochi Bench

NCLT Kochi Bench held that:
(i) No claim has been presented by the applicant during the liquidation proceeding and the applicant also taken a stand that there is no need to file any claim, if this is the stand of the applicant then the question of rejection of claim does not arise at all. The applicant also has not filed this application under section 42 of IBC 2016, the specific provision available in IBC 2016 to prefer an appeal against the rejection of claim order, but this application is filed under the residuary provision of section 60(5) of IBC 2016.
(ii) In this case, the applicant initiated the proceeding under section 14B and 7Q of EPF Act 1952 after the corporate debtor admitted into CIRP, continued the proceeding and passed the order on 24.07.2019 and issued Recovery certificates dated 30.07.2019.
(iii) The applicant knowingly flouted the moratorium order and proceeded with the proceedings under sections 7Q and 14B of the Employees provident funds and Miscellaneous Provisions Act 1952, thus committed an offence punishable under section 74(2) of IBC, 2016. This section is criminal in nature falls under Chapter VII under the heading Offences and Penalties, under section 236(1) of IBC, 2016 special court alone have jurisdiction. Further under section 236 (2) of IBC, 2016 cognizance of the offence can be taken only on the compliant of IBBI or Central Government. Hence the 2nd respondent is granted liberty to approach the IBBI to proceed against the applicant’s erred officials in this regard.

Initiation of proceeding u/s 14B & 7Q of EPF Act 1952 after Corporate Debtor admitted into CIRP is an offence punishable u/s 74(2) of IBC, NCLT grants liberty to Liquidator to approach IBBI to proceed against EPFO’s erred officials in this regard – Regional Provident Fund Commissioner Vs. Excel Glass Ltd. (Under Liquidation) – NCLT Kochi Bench Read Post »

Search and Seizure of records of Corporate Debtor and issuance summons to Resolution Professional by GST Department during CIRP are violation of mortarium under section 14 of IBC, 2016 – K. Easwara Pillai – RP Mangomeadows Agricultural Pleasure Land Pvt. Ltd. Vs. Goods and Services Tax Department – NCLT Kochi Bench

In this case, GST Department after submitted its claim in CIRP, all of a sudden raided the premises of the Corporate Debtor after issued summon to Suspended Managing Director of the Corporate Debtor. The raid was conducted and seized all the account documents and also sent a summon to the Resolution Professional to appear for an inquiry.
The question before NCLT Kochi Bench was whether the search and seizure of records of the corporate debtor and issuance of summons to applicant/resolution profession are violative of mortarium order passed under section 14 of IBC, 2016?
Read here landmark decision of the NCLT Kochi Bench.

Search and Seizure of records of Corporate Debtor and issuance summons to Resolution Professional by GST Department during CIRP are violation of mortarium under section 14 of IBC, 2016 – K. Easwara Pillai – RP Mangomeadows Agricultural Pleasure Land Pvt. Ltd. Vs. Goods and Services Tax Department – NCLT Kochi Bench Read Post »

Adjudicating Authority while exercising jurisdiction under the Code is not required to return any finding of an offence within the meaning of Section 74 of IBC – Almas Global Opportunity Fund SPC Vs. CA Kannan Triuvengadam – NCLAT New Delhi

NCLAT held that Section 33, sub-section (3) uses the expression “may make an application to the Adjudicating Authority for liquidation order”. The Application which was filed by Respondent No.1 was as noted above not being confine to Section 33, sub-section (3), rather prayer for liquidation was an alternative prayer. The Adjudicating Authority was not prohibited from exercise of its powers as contained in other provisions of the Code referred in the Application. Further it held that the provision of the Code contemplates filing of a complaint by Board or the Central Government or any person authorized by the Government in this behalf. It is true that Adjudicating Authority while exercising jurisdiction under the Code is not required to return any finding of an offence within the meaning of Section 74, sub-section (3). It is a prerogative of the Special Court under Section 236 to try an office and award punishment if any. The Adjudicating Authority at best can draw attention of the Board or the Central Government to facts and features of a particular case to consider as to whether it is an appropriate case for filing a complaint within the meaning of Section 236, sub-section (2). The order passed by the Adjudicating Authority under paragraph 8.1(ii) has to be treated only a direction to the effect that order of NCLT be forwarded to the Board and Central Government to consider as to whether present is a fit case for initiating/ filing any complaint under Section 236, sub-section (2) of the Code. It is necessary to clarify that any observations made by Adjudicating Authority in the impugned order regarding ingredients of offence under Section 74, sub-section (3) are neither binding nor determinative of any issue when the Special Court where a complaint is filed proceed with the trial of offence. The observations made by the Adjudicating Authority has to be read only for the purpose of sending the copy of the order to the Board for consideration for filing a complaint and order of the Adjudicating Authority cannot be treated to any direction to initiate action under Section 74, sub-section (3), which is in the domain of the Board and Central Government as per the statutory Scheme of the Code.

Adjudicating Authority while exercising jurisdiction under the Code is not required to return any finding of an offence within the meaning of Section 74 of IBC – Almas Global Opportunity Fund SPC Vs. CA Kannan Triuvengadam – NCLAT New Delhi Read Post »

Can the Adjudicating Authority entertain an application filed by the Chairman of the Monitoring Committee to give a fresh lease of life to the CIRP in case of Successful Resolution Applicant failed to implement the Resolution Plan – CA Kannan Tiruvengadam, erstwhile RP, Chairman of the Monitoring Committee Vs. Almas Global Opportunity Fund SPC (Successful Resolution Applicant) – NCLT Kolkata Bench

The Adjudicating Authority observed that the Successful Resolution Applicant(SRA) has taken the entire process for a ride, and nothing can really excuse this audacity. The attitude of the SRA really will tick every parameter that can be applied to satisfy the “knowing and wilful contravention” test laid down in section 74(3) of the Code on a reasonable construction. What has really spared the blushes in the present case is the efficiency with which the Chairman of the Monitoring Committee has been running the Corporate Debtor. But this cannot go on for ever. A strong message needs to go to the SRA that the majesty of law needs to be respected at all costs, and that Indian judicial processes cannot be taken for a ride like this. The SRA seems to think that other suitors will not come in to hold the hand of the Corporate Debtor and pull it out of insolvency. Therefore, we fully intend to call the bluff of the SRA that non-extension of time will put the Corporate Debtor and its stakeholders in serious jeopardy.
The AA ordered to forfeit the PBG/Security Money, proceedings u/s 74(3) r.w. Sec. 236 against SRA, the entire period consumed in the CIRP commencing from the first date of issue of Form G inviting Expressions of Interest till the date of passing of orders in this application is excluded etc.

Can the Adjudicating Authority entertain an application filed by the Chairman of the Monitoring Committee to give a fresh lease of life to the CIRP in case of Successful Resolution Applicant failed to implement the Resolution Plan – CA Kannan Tiruvengadam, erstwhile RP, Chairman of the Monitoring Committee Vs. Almas Global Opportunity Fund SPC (Successful Resolution Applicant) – NCLT Kolkata Bench Read Post »

Additional Sessions Judge does not have jurisdiction to entertain the complaint filed by IBBI – Satyanarayan Bankatlal Malu Vs. Insolvency and Bankruptcy Board of India – Bombay High Court

Hon’ble High Court holds that the impugned proceedings have been instituted by the Respondents (Complainant) in the Court of Additional Sessions Judge, were not sustainable for want of jurisdiction. As a consequence order, ‘issue process’ passed by the learned Additional Sessions Judge against the Petitioners, in a complaint by the Respondents/Board was without jurisdiction and therefore not sustainable equally. It is therefore to be held that Special Court “which is to try offences under the I.B. Code is the Special Court established under Section 435(2)(b) of the Companies Act, 2013 which consists of Metropolitan Magistrate or Judicial Magistrate First Class. The Petition is therefore allowed in terms of prayer clause (a).

Additional Sessions Judge does not have jurisdiction to entertain the complaint filed by IBBI – Satyanarayan Bankatlal Malu Vs. Insolvency and Bankruptcy Board of India – Bombay High Court Read Post »

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