3 Judge Bench

The Court must only conduct a limited enquiry for the purpose of examining whether Section 11(6) of Arbitration & Conciliation Act, 1996 application filed within the limitation period of three years or not, it would not be proper to enquiry whether the claims are time barred | Arbitral Tribunal may impose arbitration costs on petitioner if claims are time-barred – Aslam Ismail Khan Deshmukh Vs. Asap Fluids Pvt. Ltd. and Anr. – Supreme Court

Hon’ble Supreme Court held that while determining the issue of limitation in the exercise of powers under Section 11(6), the referral court must only conduct a limited enquiry for the purpose of examining whether the Section 11(6) application has been filed within the limitation period of three years or not. At this stage, it would not be proper for the referral court to indulge in an intricate evidentiary enquiry into the question of whether the claims raised by the petitioner are time barred. Such a determination must be left to the decision of the arbitrator.

The Court also held that the arbitral tribunal may direct that the costs of the arbitration shall be borne by the party which the Tribunal ultimately finds to have abused the process of law and caused unnecessary harassment to the other party to the arbitration.

The Court must only conduct a limited enquiry for the purpose of examining whether Section 11(6) of Arbitration & Conciliation Act, 1996 application filed within the limitation period of three years or not, it would not be proper to enquiry whether the claims are time barred | Arbitral Tribunal may impose arbitration costs on petitioner if claims are time-barred – Aslam Ismail Khan Deshmukh Vs. Asap Fluids Pvt. Ltd. and Anr. – Supreme Court Read Post »

Is it required to issue notice to Personal Guarantor while passing order under Section 115(2) of IBC when the Personal Guarantor did not submit Repayment Plan | Is Regulation 19 of Personal Guarantors Insolvency Regulation 2019 applicable even no Repayment Plan is submitted by Personal Guarantor – Sudip Dutta @ Sudip Bijoy Dutta Vs. Prashant Jain RP – NCLAT New Delhi

Hon’ble NCLAT held that:’
(i) The Personal Guarantor kept silence for years together and when consequential Order under Section 115 has been passed by the Adjudicating Authority, he is raising grievance of not being heard by the Adjudicating Authority.
(ii) Regulation 19 is not applicable in the facts of the present case nor Personal Guarantor can rely on Regulation 19.
(iii) No Repayment Plan having been submitted or finalised, Adjudicating Authority has not committed any error in giving liberty to the Creditors to file an Application for Bankruptcy under Chapter IV, which is a statutory consequence under Section 115(2). In so far as discharge of the RP is concerned, the discharge is also consequential to completion of Insolvency and Bankruptcy Process against the Personal Guarantor under the provisions of Chapter III of the Code.

Is it required to issue notice to Personal Guarantor while passing order under Section 115(2) of IBC when the Personal Guarantor did not submit Repayment Plan | Is Regulation 19 of Personal Guarantors Insolvency Regulation 2019 applicable even no Repayment Plan is submitted by Personal Guarantor – Sudip Dutta @ Sudip Bijoy Dutta Vs. Prashant Jain RP – NCLAT New Delhi 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 »

The date of default cannot be shifted by a recall notice issued by the Financial Creditor – Sandip Narendrakumar Patel (Promotor/Ex-Director) Yours Ethnic Foods Pvt. Ltd. Vs. Svakarma Finance Pvt. Ltd. and Anr. – NCLAT New Delhi

Hon’ble NCLAT held that the Corporate Debtor cannot be permitted to take advantage of the fact that the Financial Creditor had issued a notice of recall dated 06.11.2020, giving 15 days time, to the Corporate Debtor to pay the same and to calculate the date of default as 21.11.2020 which falls within the cut off period of Section 10A because issuance of recall notice, in pursuance of the clause 10.3 of the agreement, was on the occurrence of any of the events of default, which had already occurred in the month of January or at the most February.

The date of default cannot be shifted by a recall notice issued by the Financial Creditor – Sandip Narendrakumar Patel (Promotor/Ex-Director) Yours Ethnic Foods Pvt. Ltd. Vs. Svakarma Finance Pvt. Ltd. and Anr. – NCLAT New Delhi Read Post »

The Arbitration Act is a self-contained code, it does not distinguish between governmental and private entities | Governmental entities must be treated in a similar fashion to private parties insofar as proceedings under the Arbitration Act are concerned, except where otherwise indicated by law – International Seaport Dredging Pvt. Ltd. Vs. Kamarajar Port Ltd. – Supreme Court

Hon’ble Supreme Court held that an assessment as to whether a party is reliable or trustworthy is subjective. Many private entities, too, may rely on the size of their undertaking, its success, public image, or other factors to argue that they are not fly-by-night operators. In the absence of any provision of law in this regard, it would be inappropriate for courts to apply this standard while adjudicating the conditions upon which a stay of an award may be granted. Similarly, the form of security required to be furnished should not depend on whether a party is a statutory or other governmental body or a private entity. Governmental entities must be treated in a similar fashion to private parties insofar as proceedings under the Arbitration Act are concerned, except where otherwise indicated by law. This is because the parties have entered into commercial transactions with full awareness of the implications of compliance and non-compliance with the concerned contracts and the consequences which will visit them in law.

The Arbitration Act is a self-contained code, it does not distinguish between governmental and private entities | Governmental entities must be treated in a similar fashion to private parties insofar as proceedings under the Arbitration Act are concerned, except where otherwise indicated by law – International Seaport Dredging Pvt. Ltd. Vs. Kamarajar Port Ltd. – Supreme Court Read Post »

Invoices containing the term of interest cannot be operated against the Corporate Debtor unless there is an agreement for interest or any other document showing that the Corporate Debtor has accepted the obligation for interest – Rishabh Infra Through Hari Mohan Gupta Vs. Sadbhav Engineering Ltd. – NCLAT New Delhi

Hon’ble NCLAT held that the entire Principal Amount having been paid, the Adjudicating Authority did not commit any error in rejecting the Section 9 Application filed by the Operational Creditor. Invoices which have been sent by the Operational Creditor containing the term of interest cannot be operated against the Corporate Debtor unless there is an agreement for interest or any other document showing that the Corporate Debtor has accepted the obligation for interest.

Invoices containing the term of interest cannot be operated against the Corporate Debtor unless there is an agreement for interest or any other document showing that the Corporate Debtor has accepted the obligation for interest – Rishabh Infra Through Hari Mohan Gupta Vs. Sadbhav Engineering Ltd. – NCLAT New Delhi Read Post »

Can a Corporate Debtor file an application under Section 8 of the Arbitration and Conciliation Act, 1996, after filing a reply to an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC)? – Century Aluminium Company Ltd. Vs. Religare Finvest Ltd. – NCLAT New Delhi

Hon’ble NCLAT held that:

(i) Right to move Section 8 Application was forfeited since Corporate Debtor did not choose to file the Application.
(ii) Whether Arbitration Proceedings are pending on the date when Section 7 Application is filed or it is sought to be initiated subsequent to filing of Section 7 Application is immaterial.
(iii) By not filing of Application under Section 8 at the time of filing of a Reply to Section 7, Corporate Debtor has forfeited his right to file his Application under Section 8.
(iv) Arbitration Proceeding which were initiated by Financial Creditor are still pending, that neither preclude the Financial Creditor from filing a Section 7 Application nor preclude the Adjudicating Authority to proceed to consider the debt and default in Section 7 Application.

Can a Corporate Debtor file an application under Section 8 of the Arbitration and Conciliation Act, 1996, after filing a reply to an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC)? – Century Aluminium Company Ltd. Vs. Religare Finvest Ltd. – NCLAT New Delhi Read Post »

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