Orissa High Court Quashes Criminal Proceedings Against Ferro Alloys Over Pre-CIRP Environmental Law Violations

The Orissa High Court has recently quashed criminal proceedings against Ferro Alloys Corporation Ltd over alleged environmental law violations. It held that continuation of the prosecution was not sustainable as the violations happened before the insolvency resoulution. Justice Dr. Sanjeeb K. Panigrahi also noted that offences under Section 15 of the Environment (Protection) Act, 1986 have since been decriminalised. They have been replaced with a regime of civil penalties. “In the present...

Insolvency Professional Can Continue Existing Assignments After Attaining Age 70: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Chennai has held that an insolvency professional can continue handling assignments already entrusted to him even after turning 70 years of age, the upper age limit for insolvency professionals, if the Authorisation for Assignment (AFA) expires during the course of those assignments. A bench of Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain observed: “...where the authorisation of assignment, (AFA)...

NCLAT Upholds NCLT Order Asking CoC To Consider Prior Judicial Observations On RP Before Appointment

The National Company Law Appellate Tribunal (NCLAT) in Chennai has refused to interfere with an order directing the Committee of Creditors (CoC) to consider adverse observations made against an insolvency professional in an earlier proceeding. The observations were to be considered before proceeding with approval of his appointment as Resolution Professional in two corporate insolvency cases. A bench of Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain observed that the...

Going Concern Sale Does Not Transfer Subsidiaries Outside Liquidation Estate: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Chennai has recently held that a purchaser of a corporate debtor sold as a going concern in liquidation cannot claim rights over its subsidiaries, joint ventures, or associate entities merely because they belong to the same corporate group. The tribunal ruled that such assets fall outside the liquidation estate and do not automatically pass to the successful bidder. A bench of Judicial Member Justice Sharad Kumar Sharma and Technical...

NCLT Bengaluru Holds Bank Cannot Retain Title Deeds After Full Payment of Resolution Plan Dues

The National Company Law Tribunal (NCLT) at Bengaluru has held that a bank that has received the full amount payable under an approved resolution plan cannot continue withholding a corporate debtor's title deeds and security documents. The tribunal held that the pendency of an appeal concerning an interest dispute is not, by itself, a valid reason to retain those documents. A bench of Judicial Member Sunil Kumar Aggarwal and Technical Member Radhakrishna Sreepada directed Kotak Mahindra Bank...

Insolvency Against Personal Guarantor Maintainable Without CIRP Against Borrower: NCLT Kolkata

The National Company Law Tribunal (NCLT) at Kolkata has reiterated that insolvency proceedings against a personal guarantor can be maintained even if no insolvency proceedings have been initiated against the principal borrower. The ruling came while admitting Indian Bank's insolvency application against Santosh Jhawar, personal guarantor to Burgundy Life Style Pvt Ltd. A bench of Judicial Member Bidisha Banerjee and Technical Member Rekha Kantilal Shah relied on the National Company Law...

CoC Cannot Claim Net Gain From Subsequent Land Acquisition After Approving Resolution Plan: NCLT Mumbai

The National Company Law tribunal (NCLT) at Mumbai has held that creditors cannot claim the benefit of a subsequent increase in the value of a corporate debtor's assets after approving a resolution plan. The tribunal ruled that the gain cannot be claimed merely because the increase was not contemplated when the plan was approved. A bench of Judicial Member K.R. Saji Kumar and Technical Member Anil Raj Chellan observed that once a resolution plan has been approved by the Committee of Creditors...

NCLT Ahmedabad Admits CIRP Against JSW Subsidiary, Holds Guarantor Liability Co-extensive With Borrower

The Ahmedabad Bench of the National Company Law Tribunal (NCLT) on 17 June held that insolvency proceedings against a corporate guarantor cannot be made conditional on the realisation of assets of the principal borrower and reaffirmed that a guarantor's liability remains co-extensive with that of the principal debtor under Section 128 of the Indian Contract Act, 1872. Judicial Member Chitra Hankare and Technical Member Dr. V.G. Venkata Chalapathy admitted the insolvency petition filed by...

Bare Production Of Guarantee Deed Without Commercial Nexus Cannot Establish Debt: NCLT Mumbai

The Mumbai Bench of the National Company Law Tribunal on 16 June held that a Section 95 insolvency petition under the Insolvency and Bankruptcy Code cannot be sustained on the basis of a mere guarantee deed without supporting evidence of commercial context, consideration, financial capacity and nexus establishing a legally enforceable debt. Judicial Member Ashish Kalia and Technical Member Sanjiv Dutt dismissed an insolvency petition filed by Naman Syntex against Mansi Lalitkumar Manjrekar, the...

Directions To NCLT For Urgent Listing Of Plea Cannot Be Issued In Writ Jurisdiction: Delhi High Court

The Delhi High Court has recently refused to issue directions to the National Company Law Tribunal (NCLT) for urgent listing of a homebuyer's transfer plea in an ongoing insolvency proceeding. The court observed that such directions cannot be issued in exercise of its writ jurisdiction. A vacation bench of Justice Tejas Karia dismissed a petition filed by homebuyer Anuj Goyal and imposed costs of ₹25,000, payable to the Delhi High Court Bar Clerks' Association within two weeks. “Such...

NCLT Mumbai Admits Paytm Parent's Insolvency Plea Against Gaming Company Fabzen Over ₹3.41 Crore Dues

The National Company Law Tribunal (NCLT) in Mumbai has admitted an insolvency plea filed by One97 Communications Ltd, which operates Paytm, against gaming company Fabzen Technologies Pvt Ltd over unpaid dues of more than ₹3.41 crore for digital advertising services. A bench of Judicial Member Nilesh Sharma and Technical Member Sameer Kakar held that One97 had established the existence of an operational debt and a payment default, while Fabzen had failed to show any pre-existing dispute. “In...

Settlement In Corporate Debtor's Liquidation Does Not Extinguish Personal Guarantee Obligations: NCLT Chennai

The National Company Law Tribunal (NCLT) at Chennai has reiterated that a settlement reached during the liquidation of a corporate debtor does not absolve a personal guarantor of liability under a separate contract of guarantee. A bench of Judicial Member Sanjiv Jain and Technical Member Venkataraman Subramaniam admitted an insolvency petition filed by Aditya Birla Finance Limited against G. Thiyagarajan, who had furnished a personal guarantee for credit facilities extended to Velohar Infra...