Related Party Supplies Not CIRP Costs Without CoC Approval: NCLAT In Amtek Auto Insolvency

The National Company Law Appellate Tribunal (NCLAT) at Delhi has dismissed a Rs 18.98 crore claim by Lotus Auto Engineering Limited, a group company of Amtek Auto Limited, holding that supplies made by a related party during the corporate insolvency resolution process cannot be treated as insolvency resolution process costs unless expressly approved by the Committee of Creditors. A Principal Bench comprising Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra held that...

Homebuyers Acting As Resolution Applicants Cannot Challenge CIRP Framework After Filing Plan: NCLT Kochi

The National Company Law Tribunal (NCLT) at Kochi has recently held that a homebuyers' association cannot challenge the insolvency framework after submitting a resolution plan under it while hearing the insolvency of Samson and Sons Builders and Developers Private Limited. The order was passed by Judicial Member Vinay Goel. The tribunal said a party cannot accept the decisions of the Committee of Creditors and later question the same decisions after stepping into the role of a resolution...

Supreme Court Refuses To Interfere With NCLAT Order Upholding CIRP Against Air Travel Enterprises

The Supreme Court on Tuesday dismissed an appeal filed by E.M. Najeeb Ellias Mohammed, promoter of Kerala-based travel agency Air Travel Enterprises India Ltd., declining to interfere with an NCLT order admitting insolvency proceedings against the company as a corporate guarantor A bench of Justices Pamidighantam Sri Narasimha and Vijay Bishnoi held that no error of law or fact was committed by the National Company Law Tribunal. “Having heard learned senior counsel appearing for the appellant...

Pledged Shares Already With Creditor Need Not Be Returned During CIRP: NCLT Mumbai

The National Company Law Tribunal (NCLT) at Mumbai has held that, in the facts of the case, pledged shares that were already lying in the custody of a secured creditor before the start of the corporate insolvency resolution process did not need to be transferred back to the corporate debtor's demat account during insolvency. A bench of Judicial Member Nilesh Sharma and Technical Member Charanjeet Singh Gulati held that, in this case, the Insolvency and Bankruptcy Code allows only preservation...

NCLT Mumbai Orders Reconsideration Of Modified Resolution Plan By Highest Bidder In Logistics Company Insolvency

The National Company Law Tribunal (NCLT) at Mumbai has directed the Committee of Creditors to reconsider Athena India's modified resolution plan in the insolvency of Arshiya Northern FTWZ Limited, a logistics and warehousing company operating a Free Trade and Warehousing Zone.The tribunal held that denying an opportunity to consider value-enhancing modifications was arbitrary and contrary to the objective of value maximization under the insolvency framework A coram of Judicial Member Mohan...

NCLT Ahmedabad Admits Takshashila Heights Into CIRP After Supreme Court Order

The National Company Law Tribunal (NCLT) Ahmedabad Bench has recently admitted real estate developer Takshashila Heights Private Limited into insolvency after the Supreme Court dismissed the company's challenge to its financial creditor, leaving no discretion under the Insolvency and Bankruptcy Code. A coram of Judicial Member Chitra Hankare and Technical Member Dr. V. G. Venkata Chalapathy allowed the Section 7 CIRP plea filed by Edelweiss Asset Reconstruction Company Limited. It...

NCLAT Dismisses Insolvency Appeal Against Larsen & Toubro Over Dues Claimed By Former Employee

The National Company Law Appellate Tribunal (NCLAT) at New Delhi has recently dismissed an insolvency appeal filed against Larsen & Toubro Ltd by a former senior employee over alleged unpaid salary and service benefits.A Bench of Judicial Member Justice Mohd. Faiz Alam Khan and Technical Member Naresh Salecha upheld an order of the National Company Law Tribunal, Mumbai, which had rejected the employee's CIRP plea. The Appellate Tribunal held that disputes arising from employment...

Intent Irrelevant Once Conditions Of Preferential Transaction Are Met: NCLAT Reiterates

The National Company Law Appellate Tribunal (NCLAT) at New Delhi has reiterated that a preferential transaction (Section 43 of the Insolvency and Bankruptcy Code) works on a statutory deeming fiction. Once the necessary ingredients are met, intent or motive does not matter. The burden shifts to the directors and beneficiaries to show that the transactions were in the ordinary course of business. A bench of Judicial Member Justice Mohd. Faiz Alam Khan and Technical Member Naresh Salecha...

NCLT Amaravati Cautions Against Presuming Corporate Actions Are Always Properly Approved

The National Company Law Tribunal (NCLT) at Amaravati, while admitting a real estate company into insolvency, held that the absence of a board resolution authorising the borrowing of funds and execution of promissory notes on behalf of the company did not, in the facts of the case, defeat the existence of a financial debt. At the same time, it cautioned against a mechanical reliance on the doctrine of indoor management to validate such transactions.The doctrine of indoor management, also known...

NCLAT Upholds ₹6.56 Crore Liability on Paranjape Agro Promoter For Fraudulent Stock Write-Off

The National Company Law Appellate Tribunal (NCLAT) at New Delhi has recently held that the promoter-director of Paranjape Agro Products India Private Limited must personally repay Rs 6.56 crore to the company after finding that inventory shown in the books never existed and was written off to defraud creditors at a time when there was no reasonable prospect of avoiding insolvency. A bench of Justice Mohd. Faiz Alam Khan and Technical Member Indevar Pandey upheld an order passed by the National...

NCLAT Remands Case After NCLT Failed To Record Finding On Homebuyers' Threshold in Insolvency Plea

The National Company Law Appellate Tribunal (NCLAT) at New Delhi has set aside an order of the NCLT Mumbai Bench admitting insolvency proceedings against a real estate developer, holding that the NCLT failed to record a clear finding on the statutory threshold required for homebuyers under the Insolvency and Bankruptcy Code. The matter has been remanded for a fresh determination limited to this issue. A bench comprising Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra held...

EPFO Claim Misclassified As Government Dues; NCLAT Directs Lender To Pay Dues In Textile Company's Liquidation

The National Company Law Appellate Tribunal (NCLAT) at Chennai has held that the provident fund dues of liquidation bound Harshavardhan Cotton and Synthetic Pvt. Ltd. could not have been treated as government dues during liquidation, even though the company had not maintained a separate provident fund account. The tribunal said that, on the facts of the case, the amount claimed by EPFO had to be treated as a third-party asset and paid before the liquidation waterfall was applied. A bench of...