Dr. Justice G.Jayachandran

Whether a State Financial Corporation, after liquidation of a Company and receiving its shares as a Secured Creditor, has any right to proceed against the Company, its promoters and guarantors for recovery of balance loan amount? – Tamil Nadu Industrial Investment Corporation Ltd. (TIICL) Vs. Pulsar Electronics Ltd. and Ors. – Madras High Court

/ 38 minutes of reading

In the present case, the petition for recovery is filed both against the principal borrower and the Guarantor. The conduct of the petitioner, allowing the Company to get wound up and receiving Rs. 55 lakhs from the proceeds of the assets of the Company without any demure or protest or reservation do not extinguishes its right or remedy against the principal debtor or the guarantors. After exhausting its right against the property mortgaged by the principal debtor, the TIIC had proceed against the borrowing Company and the Guarantor since the liability of the borrower not fully satisfied.

Whether a State Financial Corporation, after liquidation of a Company and receiving its shares as a Secured Creditor, has any right to proceed against the Company, its promoters and guarantors for recovery of balance loan amount? – Tamil Nadu Industrial Investment Corporation Ltd. (TIICL) Vs. Pulsar Electronics Ltd. and Ors. – Madras High Court 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

/ 14 minutes of reading

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.

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 Read Post »

Moratorium given to an individual under Chapter III of IBC, 2016 will not cover the proceedings under Sec. 138/141 of Negotiable Instruments Act, 1881 initiated against Directors or Guarantors of any Company, which is not a Corporate Debtor under the Code – Ashok B.Jeswani and Anr. Vs. Redington India Ltd. – Madras High Court

/ 12 minutes of reading

Hon’ble Madras High Court refers judgment in P. Mohanraj & Ors. v. Shah Brothers Ispat Pvt. Ltd. (2021) ibclaw.in 24 SC and Ajay Kumar Radheyshyam Goenka v. Tourism Finance Corporation of India Ltd. (2023) ibclaw.in 30 SC and holds that as the Hon’ble Supreme Court held that the moratorium given to the corporate debtor under Chapter II will not cover the individuals, who are the Guarantors of Directors. Similarly, the moratorium given to an individual under Chapter III will not cover the proceedings initiated against them as Directors or Guarantors of any company, which is not a corporate debtor under this Code.

Moratorium given to an individual under Chapter III of IBC, 2016 will not cover the proceedings under Sec. 138/141 of Negotiable Instruments Act, 1881 initiated against Directors or Guarantors of any Company, which is not a Corporate Debtor under the Code – Ashok B.Jeswani and Anr. Vs. Redington India Ltd. – Madras High Court Read Post »

Resolution Professional is ‘Occupier’ of Corporate Debtor’s factory as defined under Section 2(n) of the Factories Act, 1948 | For the violation or omission in the factory premises, Resolution Professional is responsible for the proceedings if any, initiated against Resolution Professional under Factories Act in his capacity as Occupier | The said proceedings will not be covered under Sec. 14 or 233 of IBC – Subrata Monindranath Maity v. The State – Madras High Court

/ 20 minutes of reading

In this landmark judgment, Hon’ble Madras High Court has held that:
(i) The protection to the resolution professional given under Section 233 of IBC is obviously only in respect of act done or intended to be done in good faith under the code. The failure or omission to provide safety measures in the factory cannot be stretched to inaction.
(ii) The resolution professional is the occupier of the factory (as defined under Section 2(n) of the Factories Act, 1948) and he cannot abdicate his duties and responsibility of providing necessary safety measures in the factory as mandated in the Factories Act.
(iii) The expression used in section 17 of the Code explicitly say that the resolution professional is the person who is vested with absolute control of the Corporate Debtor company. While so, for the violation or omission in the factory premises, Resolution Professional is responsible for the Proceedings if any, initiated against Resolution Professional under the Factories Act in his capacity as occupier. The said proceedings will not be covered under section 14 or 233 of the Code.

Resolution Professional is ‘Occupier’ of Corporate Debtor’s factory as defined under Section 2(n) of the Factories Act, 1948 | For the violation or omission in the factory premises, Resolution Professional is responsible for the proceedings if any, initiated against Resolution Professional under Factories Act in his capacity as Occupier | The said proceedings will not be covered under Sec. 14 or 233 of IBC – Subrata Monindranath Maity v. The State – Madras High Court Read Post »

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