Supreme Court

Arbitral Award For Claims Not Included In IBC Resolution Plan Can't Be Enforced: Supreme Court

The Supreme Court recently allowed an appeal challenging the enforcement of an arbitral award passed by the Micro and Small Enterprises Facilitation Council (MSEFC) against Electrosteel Steels Ltd., holding that the award was non-executable in view of the resolution plan approved under Section 31 of the Insolvency and Bankruptcy Code (IBC), 2016. “we have no hesitation to hold that upon approval of the resolution plan by the NCLT, the claim of the respondent being outside the purview of the resolution plan stood extinguished. Therefore, the award dated 06.07.2018 is incapable of being executed”, the Court said.

High Court

Proceedings U/S 37 A Of FEMA Can't Be Continued During Moratorium U/S 33(5) Of IBC: Calcutta High Court

The Calcutta High Court bench of Justice Jay Sengupta has held that once a liquidation order against the Corporate Debtor is passed, all proceedings including those pending at the time of such order under the Foreign Exchange Management Act, 1999 (FEMA) cannot be continued, nor can any new proceedings be initiated, in view of the bar under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 (Code). This is further reinforced by the non obstante clause under Section 238 of the Code, which gives the Code overriding effect over conflicting provisions, including those of FEMA.

NCLAT

Adjudicating Authority Cannot Declare Sale Of Going Concern As Void Without Any Challenge: NCLAT New Delhi

The Principal Bench of NCLAT, New Delhi, consisting of Justice Ashok Bhushan (Chairperson) and Arun Baroka (Member-Technical), set aside the NCLT, Ahmedabad Bench's order and held that a sale of the corporate debtor as a going concern cannot be declared null and void suo moto by the Adjudicating Authority in the absence of any challenge to such sale. The Adjudicating Authority had earlier nullified the sale and imposed penalties on the liquidator.

Financial Creditors Proceeding With Application U/S 7 Only As A Recovery Measure Is Not The Objective Of IBC: NCLAT

The National Company Law Appellate Tribunal, Principal Bench, New Delhi (NCLAT) comprising of Justice Ashok Bhushan (Chairperson) and Barun Mitra (Member Technical) dismissed and appeal filed by a suspended director of the Corporate Debtor (Maneesh Pharmaceuticals Limited) challenging the order of admitting Section 7 application by the National Company Law Tribunal (NCLT), Mumbai Bench.

Adjudicating Authority Cannot Declare A Sale Transaction Void U/S 66(1) Of IBC: NCLAT New Delhi

The Principal Bench of the NCLAT, New Delhi, presided over by Justice Ashok Bhushan (Chairperson) along with Barun Mitra (Member-Technical), has modified an order passed by the Adjudicating Authority (NCLT, Mumbai) and partly allowed an appeal. The tribunal partly set aside the Adjudicating Authority's order, which invalidated the transfer of two flats to the appellants, but upheld the direction to repay the fraudulent consultancy charges. The tribunal held that the Adjudicating Authority is very much empowered to direct contributions to the assets of the Corporate Debtor under Section 66(1) of the IBC, 2016, for fraudulent transactions, but it cannot declare the sale transaction void.

Section 94 Of IBC Cannot Be Used To Hinder Recovery Process Under SARFAESI Act: NCLAT New Delhi

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising of by Justice Ashok Bhushan (Chairperson), Barun Mitra (Member-Technical), and Arun Baroka (Member-Technical) has upheld the dismissal of a Section 94 IBC petition filed by the personal guarantor and held that IBC proceedings cannot be misused to obstruct legitimate recovery under SARFAESI Act. It was held that the right given under Section 94 of the IBC cannot be taken away solely because of the fact that SARFAESI proceedings have been initiated previously but the Adjudicating Authority must examine the specific facts of each case to determine its applicability.

Section 45 Of IBC Applies To Transactions Made Prior To CIRP, Not On Date Of Initiation: NCLAT Principal Bench, New Delhi

The National Company Law Appellate Tribunal, (NCLAT), Principal Bench, New Delhi comprising of Justice Ashok Bhushan (Chairperson), Barun Mitra (Member (Technical) and Arun Baroka (Member (Technical) dismissed joint appeals filed by eight appellants against a common judgment of the adjudicating authority (NCLT, New Delhi) in various interlocutory applications (IAs) challenging the cancellation of residential unit allotments in the project developed by Corporate Debtor.

Application U/S 95 Of IBC Against Personal Guarantors Not Barred By Change In Debt Quantum After Approval Of Plan Against Corporate Debtor: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member) and Mr. Arun Baroka (Technical Member) has held that a change in the quantum of debt to be paid by the personal guarantor, following the approval of the resolution plan in the Corporate Insolvency Resolution Process (CIRP) of the corporate debtor, does not negate the right of the creditors to proceed against the personal guarantor under Section 95 of the Insolvency and Bankruptcy Code, 2016 (Code).

Creditor Obtaining Award Directing Real Estate Firm To Not Create Third-Party Interest In Specified Units Doesn't Amount To 'Security Interest': NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member) and Mr. Barun Mitra (Technical Member) has held that merely obtaining an arbitral award in which the corporate debtor was directed not to create any third‑party interest in specified units does not amount to creating a “security interest” within the meaning of Section 3(31) of the Insolvency and Bankruptcy Code, 2016 (Code). Therefore, a creditor relying solely on such an award cannot be classified as a secured financial creditor especially when no Builder‑Buyer Agreement was executed to evidence transfer of the unit to that creditor.

Petition U/S 9 Of IBC Cannot Be Entertained Based On Fabricated Invoices Created To Pursue Revenge Litigation Against Corporate Debtor: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member) and Mr. Arun Baroka (Technical Member) has held that a Section 9 petition under the Insolvency and Bankruptcy Code, 2016 (Code) cannot be admitted when the operational creditor has used its control over the corporate debtor's affairs to fabricate invoices and drag the company into insolvency on account of personal or matrimonial disputes pending between the creditor's partners and the corporate debtor's director.

NCLAT Upholds Order Directing Suspended Directors To Repay ₹32 Lakh Which Was Withdrawn During CIRP, Imposes ₹5 Lakh Cost

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) has upheld the order of the Adjudicating Authority directing the suspended directors of the Corporate Debtor to return the Rs.32 lakh along with interest they had withdrawn during Corporate Insolvency Resolution Process (CIRP). It also imposed costs of Rs.5 lakh on the respondents for repeatedly raising the same issue again and again in multiple proceedings.

Liquidated Damages Validly Deducted During CIRP Cannot Be Refunded After Approval Of Resolution Plan: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) has held that once the Resolution Professional opted to continue the contract during Corporate Insolvency Resolution Process (CIRP), all its terms including liquidated‑damages deductions from invoices will remain binding. These deductions cannot be faulted, and no refund can be ordered after the approval of the Resolution Plan.

Withdrawal Application Filed After Constitution Of CoC Must Obtain Its Approval U/S 12A Of IBC: NCLAT, Chennai

The National Company Law Appellate Tribunal, (NCLAT), Chennai comprising of Justice Rakesh Kumar Jain (Member (Judicial) and Jatindranath Swain (Member (Technical) dismissed joint appeals filed by the suspended director of Think & Learn Pt ltd and BCCI against the order of the National Company Law Tribunal, Bangalore Bench in relation the CIRP process of the corporate debtor- Think & Learn Pt ltd (Parent company of BYJU's)

IBC | Section 12A Application Not Mandatory If No Other Creditors Are Involved & Settlement Is Reached: NCLAT New Delhi

The National Company Law Appellate Tribunal, Principal Bench, New Delhi, comprising Justice Ashok Bhushan (Chairperson), Barun Mitral (Member-Technical), and Arun Baroka (Member-Technical), disposed of an appeal while holding that if no other claims have been received in the Corporate Insolvency Resolution Process (CIRP) and a full settlement has been reached between the parties, then it is not mandatory to file a Section 12A application under the IBC. Exercising its inherent power, the tribunal closed the CIRP proceedings.

NCLT

Absence Of Record In Information Utility Negates Claim Of Pre-Existing Dispute: NCLT Bengaluru

The National Company Law Tribunal, Bengaluru Bench, Bengaluru comprising of Hon'ble Shri Sunil Kumar Aggarwal (Member (Judicial) and Hon'ble Shri Radhakrishna Sreepada, (Member (Technical) admitted a Section 9 application filed by the operational creditor (PAN Oceanic Seed Solutions Private Limited) due to the presence of operational debt and non-repayment despite repeated reminders from the Corporate Debtor.

Defaults Occurring Out Of Settlement Agreements Are Not “Operational Debts” U/S 5(21) Of IBC: NCLT Delhi

The National Company Law Tribunal (NCLT), New Delhi bench of Shri Manni Sankariah Shanmuga Sundaram (Judicial Member) and Dr. Sanjeev Ranjan (Technical Member), rejected a section 9 Petition filed by the operational creditor under the Insolvency & Bankruptcy Code, 2016 (the code), holding that Default occurring out of settlement agreements are not “operational debts” under Section 5(21) of the Code.