Taufik Sayeed Hudli and Ors. Vs. Mangesh Vithal Kekre, RP for Hudli and Sons Metallics Pvt. Ltd. and Anr. – NCLAT New Delhi
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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
Shyam Sunder Daga Vs. Coral Infragold Pvt. Ltd. – NCLAT New Delhi
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Shyam Sunder Daga Vs. Coral Infragold Pvt. Ltd. – NCLAT New Delhi Read Post »
The protection under Section 32A of IBC is restricted only to Corporate Debtor and not to its Directors who were in-charge of the affairs of the Company when the offence committed or the signatory of the cheque – Vasan Healthcare Pvt. Ltd. Vs. India Infoline Finance Ltd. – Madras High Court
Hon’ble Madras High Court held that from the law laid in Ajay Kumar Radheyshyam Goenka vs. Tourism Finance Corporation of India Ltd. (2023) ibclaw.in 30 SC, it is clear that the Corporate Debtor cannot be prosecuted for the prior liability after the approval of the Resolution Plan. At the same time, it is to be bear in mind the protection under Section 32A of Insolvency & Bankruptcy Code, 2016 is restricted only to the Corporate Debtor and not to its Directors who were in-charge of the affairs of the Company when the offence committed or the signatory of the cheque.
Unless a Court is satisfied beyond a reasonable doubt, the jurisdiction under the Contempt of Courts Act, 1971, ought not to be exercised – Mr. Rajan Chadha and Anr. Vs. Mr. Sanjay Arora and Anr. – Delhi High Court
Hon’ble Delhi High Court held that:
(i) To punish a contemnor, the disobedience should be willful. Element of willingness is an indispensable requirement to hold a party guilty of contempt. It has been held time and again that contempt jurisdiction is a powerful weapon in the hands of the Courts, and the said proceedings being quasi-criminal in nature, the standard of proof required in these proceedings, is beyond all reasonable doubt.
(ii) Since the company is undergoing CIRP, all the assets and management of the company are with the Resolution Professional. Further, the liability of loan installments, in the form of claim submitted by the South Indian Bank, is also with the Resolution Professional. Thus, the respondent no. 1 has no control over the assets, management and liabilities of the Company. Thus, it is manifest that the R1 has been unable to pay the EMIs to the bank due to his financial inability and constraints, due to circumstances, as brought forth before this Court.
High Court allows Ex-Director of Corporate Debtor to inspect of the record available with Resolution Professional – Shantanu Prakash Vs. State Bank of India and Ors. – Delhi High Court
In this case, SCNs issued by Bank to ex-director of Corporate Debtor for reporting of Fraud, however, complete documents, on the basis of which SCNs have been issued have not been provided.
Hon’ble High Court held that it is settled law that fair procedure and the Principles of Natural Justice require that the requisite documents, which form the basis of a SCN, ought to be provided to the concerned party in order to enable such party to submit a proper reply to answer all the allegations raised against it. No party can be expected to respond to a SCN in an effective manner, in the absence of the underlying documents, which form the basis of the said SCN.
Further, Hon’ble High Court directs that the petitioner shall be allowed inspection of the records of the company, as available with the lead bank, i.e., SBI. Since, record of the company is also stated to be in the possession of the RP, it is directed that the petitioner shall also be allowed to inspect of the record of the company, as available with the RP. Upon inspection of the record of the company, the petitioner shall state the specific documents that are required from the record of the company, that form the basis of the SCNs.
Essentially for a transaction to qualify as Fraudulent Trading under Section 66(1) of IBC, 2016 and Wrongful Trading under Section 66(2) of Insolvency Code – Mr. Vijendra Kumar Jain Vs. Mr. Nitin Ramchandra Jadhav and Ors. – NCLT Mumbai Bench
Hon’ble NCLT Mumbai held that It is pertinent to mention that the concept of ‘Wrongful Trading’ has been imported from the UK Insolvency Act, 1986 into the IBC, 2016 which is still at a nascent stage in this country. Thus, by taking a cue from the judgments rendered by the English Courts in this regard, the following acts have been held to constitute ‘Wrongful Trading’;
(i) Repaying the director loan made to the company while other creditors were not paid;
(ii) Repayment of a loan to a family member;
(iii) A director paying his own salary while the salary for the employees was not paid;
(iv) Buying goods on credit when there is no means to pay for them;
(v) Using customer deposits for cash-flow purposes with no means of supplying goods;
(vi) Repaying bank personal guarantees over other creditors;
(vii) Not keeping proper accounting records;
(viii) Falsification of company records; and
(ix) Any transfer or sale of assets at anything less than a fair and reasonable commercial value.
Niraj Rathore Erstwhile Director of the CD Vs. Mr. Partha Sarathy Sarkar IRP of Modern Syntex (India) Ltd. and Anr. – NCLAT New Delhi
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On the dishonour of cheques issued in the name of Company under CIRP, Directors cannot be said to be in control and management of the affairs of the company and cannot be prosecuted – Varun Vs. Toolika Pandey – Delhi High Court
Hon’ble High Court held that post the issuance of the moratorium, it is the Insolvency Resolution Professional who has the authority to operate the bank accounts of the company, and on the dishonour of the cheques issued in the name of the company under CIRP, the accused persons/directors therein cannot be said to be in control and management of the affairs of the company, and, therefore, cannot be prosecuted.
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.
