IBC Laws - Insolvency cannot be initiated against Owner in absence of agreement between the Owner and Sub-Contractor and based on a bona fide assurance of the owner to pay the amount, no debt can be established against the owner - Sterling and Wilson Pvt. Ltd. Vs. Embassy Energy Pvt. Ltd.

Insolvency cannot be initiated against Owner in absence of agreement between the Owner and Sub-Contractor and based on a bona fide assurance of the owner to pay the amount, no debt can be established against the owner – Sterling and Wilson Pvt. Ltd. Vs. Embassy Energy Pvt. Ltd. – NCLAT Chennai

July 2, 2023

In this case, Embassy Energy Pvt. Ltd. (Corporate Debtor/owner) entered into a contract with IL&FS Solar Ltd., Contractor(ISPL). ISPL sub-contracted the work to IL&FS Energy Development Company Ltd. (IEDCL). Further, IEDCL sub-contracted the work to M/s. Sterling & Wilson Pvt. Ltd.(Operational Creditor). Adjudicating Authority has dismissed the Application filed by the Operational Creditor under Section 9 of the IBC. NCLAT held that the material on record establishes that there is no operational relationship between the Operational Creditor and the Corporate Debtor and it is pertinent to mention that the Corporate Debtor is not even a party to the agreements entered into between ISPL and IEDCL and ISPL and the Operational Creditor. The sub-Contractor would not have any contractual relationship with the Corporate Debtor and would not be entitled to prefer any claims against the Corporate Debtor, these amounts claimed cannot fall within the definition of acknowledgement of debt in the absence of any contractual relationship between the Operational Creditor and the Corporate Debtor.

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Chapter	Topic	Content
CH-2: General & Definitions
		Short Note on Insolvency and Bankruptcy Code, 2016 (IBC, 2016)
		Dispute and Existence of a Dispute
		Operational Debt and Operational Creditor
		Persons who may initiate Corporate Insolvency Resolution Process(CIRP)
		Analysis provisions of Limitation Act, 1963 with respect to Insolvency and Bankruptcy Code, 2016
CH-3: CIRP
	Topic-1 : CIRP Application & Withdrawal
		Analysis of Minimum amount of default under Section 4 of IBC
		Procedure of filing application by Financial Creditor before NCLT under Section 7 of the IBC
		Procedure of filing application by Operational Creditor before NCLT under Section 8 & 9 of the IBC
		Initiation of CIRP by corporate applicant under Section 10 of the IBC
		Analysis of withdrawal of CIRP proceeding pursuant to settlement under Section 12A of Insolvency and Bankruptcy Code, 2016 (IBC)
	Topic-2 : Declaration of moratorium and public announcement
		Declaration of moratorium and public announcement [Section 13, 14 & 15 of the IBC]
		All about the Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 including judicial pronouncements
	Topic-3 : Appointment and tenure of IRP & RP
		Appointment and tenure of Interim Resolution Professional and Resolution Professional [Section 16, 22 & 27 of the IBC]
		Role of an Interim Resolution Professional and Resolution Professional
	Topic-4 : Management of affairs by IRP
	Topic-5 : Receive and collate all the claims submitted by creditors
	Topic-6 : Committee of creditors and meetings
		Constitution of Committee of Creditors under Section 21 of IBC
		Role of Committee of Creditors & It’s Commercial Wisdom
		Analysis of provisions on Authorised Representative under IBC
		Meetings & Voting of the Committee of Creditors under Section 24 of the IBC
	Topic-7 : RP to conduct the CIRP and manage the operations
		Resolution Professional to conduct the CIRP and manage the operations of the Corporate Debtor
		Insolvency Resolution Process Costs & Essential supplies
		To identify preferential transactions under Sec. 43 of the Code in any CIRP, step to be taken by a Resolution Professional
	Topic-8 : CIRP and Resolution Plan
		Information Memorandum, Expression of Interest, Request for Resolution Plans & Resolution Plans
		Role of the prospective resolution applicant
		Persons not eligible to be Resolution Applicant [Sec. 29A of IBC]
		Submission and approval of the Resolution Plan
		Liability for prior offences under Section 32A of the IBC
CH-4 : Liquidation Process
	Topic-1 : Initiation of Liquidation
	Topic-2 : Appointment & Remuneration of Liquidator
		Appointment & Remuneration of Liquidator under Sec. 34 of IBC
		Powers and duties of Liquidator under Sec. 35, 37 of IBC
	Topic-3: Liquidation Estate
	Topic-4: Public announcement, Preliminary report, Early dissolution and Progress reports under Liquidation
	Topic-5: Claims under Liquidation
	Topic-6: Preferential, undervalued and Extortionate Credit Transactions
		Preferential, Undervalued and Extortionate Credit Transactions under Sec. 43, 44, 45, 46, 47, 48, 49, 50, 51 of IBC
		To identify preferential transactions under Sec. 43 of the Code in any CIRP, step to be taken by a Resolution Professional
	Topic-7: Secured Creditor in Liquidation Proceedings
	Topic-8: Realisation of Assets in Liquidation Proceedings
	Topic-9: Proceeds of Liquidation and Distribution of Proceeds
CH-5 : Personal Guarantor
		Chapter VIII Indemnity and Guarantee of Indian Contract Act, 1872
		All about Personal Guarantor under IBC Part-I
		All about Personal Guarantor under IBC Part-II
		Insolvency Resolution Process Regulation
		Bankruptcy Process for PG Regulation
		IRP Application to AA Rules
		Bankruptcy Process Application to AA Rules

Insolvency cannot be initiated against Owner in absence of agreement between the Owner and Sub-Contractor and based on a bona fide assurance of the owner to pay the amount, no debt can be established against the owner – Sterling and Wilson Pvt. Ltd. Vs. Embassy Energy Pvt. Ltd. – NCLAT Chennai

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