Share Application Money Deposited With Corporate Debtor Cannot Be Treated As Financial Debt U/S 5(8) Of IBC: NCLAT

The NCLAT New Delhi bench of Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that share application money deposited with the corporate debtor cannot be treated as financial debt under section 5(8) of the IBC. In this case, share application money was given for the allotment of shares but neither were shares allotted nor was money refunded. Brief Facts The present appeal filed under Section 61 of Insolvency...

Information Memorandum Based On Which Resolution Plan Is Submitted And Approved By CoC Cannot Be Modified: NCLAT

The NCLAT New Delhi bench of Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that Information Memorandum prepared by the Resolution Professional based on which the Resolution Plan was submitted and later approved by the CoC, cannot be modified.In this case, the allotment units to homebuyers were cancelled by the erstwhile management of the Corporate Debtor and this information was also included in the Information...

Reduction Of Share Capital Does Not Exempt Company From Fulfilling Other Statutory Obligations: NCLT Ahmedabad

The National Company Law Tribunal, Ahmedabad comprising of Dr V.G Venkata Chalapathy (Member Technical) and Chitra Hankare (Member Judicial) approved a Section 66 application of Companies Act, 2013 filed by the Mahan Industries, seeking confirmation in the reduction of its share capital. Background of the Case The following case involves an application filed by Mahan Industries under Section 66 of the Companies Act, 2013 for seeking confirmation in the reduction of its share...

Sale Certificate Issued In Favor Of Successful Bidder Can Be Cancelled If Bid Amount Is Not Paid Within 90 Days: NCLAT

The NCLAT New Delhi bench of Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that as per Liquidation Regulations, the bid amount has to be paid within 90 days. If the amount is not paid, sale certificate issued in favor of the Successful Bidder can be cancelled and the security amount be forfeited. Brief Facts: This Appeal has been filed challenging the Order passed by the Adjudicating Authority dated ...

No Part Of Resolution Plan Can Be Given On Application Of Operational Creditor Till Plan Is Approved By Adjudicating Authority: NCLAT

The NCLAT New Delhi bench of Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that no part of the Resolution Plan can be given to the operational creditor till the Resolution Plan pending for approval before the Adjudicating Authority is approved. However, any objections to the approval of the plan can be raised before the Adjudicating Authority. Brief Facts: This appeal has been filed against the order dated...

Application U/S 95 Cannot Be Rejected On Grounds Of Pendency Of One Time Settlement Proposal: NCLAT

The NCLAT New Delhi bench of Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that pendency of One Time Settlement Proposal (OTS) which is yet to be accepted, cannot be a ground to refuse initiation of insolvency process against the personal guarantors. Brief Facts These two appeals have been filed challenging the order passed by National Company Law Tribunal, Chandigarh Bench by which Section 95 application...

IBC Weekly Round-Up [18th November To 24th November 2024]

Nominal Index Siti Networks Ltd. vs. Rajiv Suri (INTERIM APPLICATION (LODG.) NO. 31055 OF 2024 IN APPEAL NO. 597 OF 2016 IN SUIT NO. 2295 OF 2002), 2024 LiveLaw (Bom) 600 M/s Vedic Projects Pvt. Ltd. Versus Shri Sutanu Sinha, Company Appeal (AT) (Insolvency) No.1927 of 2024 K.H. Khan & Anr. Vs. Art Constructions Pvt. Ltd. & Ors.,Company Appeal (AT) (Insolvency) No. 1116 of 2024 and Company Appeal (AT) (Insolvency) No. 1117 of 2024 LAW & KENNETH SAATCHI &...

Performance Pay Does Not Qualify As Operational Debt For Which Proceedings U/S 9 Of IBC Cannot Be Initiated: NCLAT

The NCLAT Chennai bench of Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member) has held that a variable claim like performance pay which is not certain and has to be determined based on the performance of the employee will not be an operational debt as it is not the payment due therefore proceedings under section 9 of the IBC cannot be initiated for such a claim. Brief Facts The Respondent, that is, the alleged Corporate Debtor (CD), is a company...

Revisiting Resolution Plan After Commencement Of Liquidation Process Is Against Principle Of Procedural Finality: NCLAT Chennai

The National Company Law Appellate Chennai comprising of Justice Sharad Kumar Sharma, (Member Judicial) and Jatindranath Swain (Member Technical) dismissed two appeals filed by the Corporate Debtor seeking to challenge the order of NCLT, Bangalore by which it was directed to be put into the liquidation process and second to challenge the order of the same tribunal which dismissed the prayer of the Appellant for issue of an appropriate direction to the liquidator to put on hold the auction...

NCLT Is Not Right Forum To Decide Whether Closure Of Factory Under Industrial Dispute Act Was As Per Law: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) has held that the Adjudicating Authority is not the right forum to decide whether closure of the factory was in accordance with law. Such an issue should have been raised before the relevant authority under the Industrial Disputes Act and not before the Adjudicating Authority. In this case, the claim of the workers rejected by the liquidator was upheld...

Property In Possession Of Corporate Debtor Sold When Petition U/S 7 Of IBC Was In Consideration Cannot Be Excluded From Assets: NCLAT

The NCLAT Chennai bench of Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member) has held that property that is sold which was in possession of the corporate debtor immediately before the judgment in a petition under section 7 of the IBC was reserved cannot be excluded from the purview of the assets of the corporate debtor. Brief Facts The Appellant is a third party to the Corporate Insolvency Resolution Process (CIRP) proceedings which was conducted...

Official Liquidator Cannot Institute S. 61 Proceedings To Challenge Directions Issued To IBBI: NCLAT Chennai

The National Company Law Appellate Chennai comprising of Justice Sharad Kumar Sharma (Member Judicial) and Jatindranath Swain (Member Technical) dismissed an appeal filed by the Liquidator of the Corporate Debtor M/s RLS Alloys Pvt. Ltd stating that the appeal is a pre-mature appeal and that the Liquidator cannot institute a Section 61 proceedings to challenge the directions given to the IBBI.Facts of the Case The appellant who is the official liquidator of the Corporate Debtor M/s RLS Alloys...