Disbursal Of Funds Under Funding Agreement With Guaranteed Return Amounts To Financial Debt U/S 5(8) IBC: NCLT

The NCLT, Mumbai Bench, has held that a disbursal of funds under a funding agreement with guaranteed return amounts to financial debt under section 5(8) of the IBC, 2016. The bench of Judicial Member Nilesh Sharma and Technical Member Sameer Kakkar observed, “It can be said that the Applicants have invested funds under the Funding Agreement, and as per the terms of the agreement, the Applicants were promised to get the principal amount along with profit at 45% p.a., which the CD failed...

Paytm Moves NCLT Delhi Against WinZO Games Over ₹3.6 Crore Unpaid Advertising Dues

The National Company Law Tribunal (NCLT) at Delhi on Tuesday issued notice to WinZO Games after Paytm (One97 Communications Ltd) filed an insolvency plea claiming that the gaming company failed to pay around Rs 3.6 crore for advertising services. Judicial Member Justice Jyotsna Sharma and Technical Member Anu Jagmohan Singh heard the matter briefly and gave WinZO two weeks to file its reply. The matter is listed again on December 15.According to Paytm, the unpaid amount relates to four invoices...

Advance Given For Profit-Sharing In Real Estate Project Cannot Be Treated As 'Financial Debt': NCLAT New Delhi

The National Company Law Appellate Tribunal (NCLAT) New Delhi upheld the decision passed by the National Company Law Tribunal (NCLT) by which it had rejected an application under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) filed by M/s Meck Pharmaceuticals and Chemicals Pvt. Ltd. against M/s Accurate Infrabuild Pvt. Ltd. A Bench comprising Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member) observed that the advance payment made for the...

NCLT Erred In Deciding On Merits After Reserving Matter On Maintainability: NCLAT Orders Reconsideration Of Pleas

The National Company Law Appellate Tribunal (NCLAT) New Delhi set aside an order passed by the National Company Law Tribunal (NCLT) New Delhi which had dismissed applications filed by Rishi Gupta and Ashok Kumar Gupta seeking exclusion of certain financial creditors from the Committee of Creditors (CoC) on the ground that they were related parties to the corporate debtor. A Bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) observed that the NCLT had...

Public Auction Not Compulsory For Sale Of Encumbered Assets If Charge Holders Consent: NCLAT New Delhi

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench set aside an order passed by the National Company Law Tribunal (NCLT) New Delhi by which it had directed independent bidding for the sale of non-core assets of Arshiya Limited during its Corporate Insolvency Resolution Process (CIRP). The Tribunal held that public auction is not compulsory for the sale of encumbered assets of the corporate debtor if the secured creditors consent to such a transaction under Regulation 29...

Sale Of Secured Assets Completed Before Filing Of Insolvency Application Can't Be Invalidated By Moratorium: NCLAT New Delhi

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench held that assets lawfully sold in an auction prior to filing of an insolvency application under section 94 of the Insolvency and Bankruptcy Code, 2016 (IBC) cannot be included in the debtors' estate or protected by moratorium under section 96 of the IBC. A Bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) dismissed the appeal filed by Maria Kuresh Rajkotwala, upholding the an order...

Resignation as Director Doesn't Relieve Guarantor of Personal Guarantee Obligations: NCLAT

The National Company Law Appellate Tribunal at Delhi recently observed that a resignation from directorship does not absolve a person from obligations arising under a personal guarantee agreement. The tribunal held that a personal guarantee, once executed as a continuing obligation, remains binding even after the guarantor steps down from the company's board. A bench comprising Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra passed the order on October 29, upholding the...

Termination Of Contract During CIRP For Performance Default Not Covered By Moratorium: NCLAT New Delhi

The National Company Law Appellate Tribunal (NCLAT) New Delhi held that termination of a contract based on long performance defaults does not violate section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC). A Bench comprising Justice Ashok Bhushan (Chairperson) and Arun Baroka (Technical Member) dismissed the appeal filed by Mr. Pradeep Upadhyay, Liquidator of M/s Dugal Associates Pvt. Ltd., against Bhadohi Industrial Development Authority (BIDA), upholding the order of the NCLT,...

One-Time Settlement Proposal Made After Expiry Of Limitation Does Not Extend Period U/S 18 Of Limitation Act: NCLT Indore

The National Company Law Tribunal (NCLT), Indore Bench, has held that the one-time settlement (OTS) proposal submitted after the expiry of the limitation period doesn't extend the limitation period under section 18 of the Limitation Act, 1963. The bench of Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta observed that if a party makes an acknowledgment in terms of Section 18 beyond the period of limitation, then such a case would not be covered by Section...

NCLT Mumbai Clears Reliance Retail's Consumer Brands Restructuring Plan

The National Company Law Tribunal (NCLT) at Mumbai has approved Reliance Retail's plan to reorganize its consumer products business. The move will shift the group's fast-moving consumer goods and brands division into a new arm called Reliance Consumer Products Limited, giving the business its own management and focus. In an order passed on November 6, a coram of Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar observed that there was no impediment in sanctioning the...

Personal Guarantors Cannot Misuse Insolvency Process To Defeat Creditor Recovery: NCLT Chennai

The National Company Law Tribunal (NCLT), Chennai, has recently ruled that personal guarantors cannot misuse the insolvency process to delay or obstruct legitimate recovery actions by creditors. In an order passed on October 10 by a coram of Judicial Member Jyoti Kumar Tripathi and Technical Member Ravichandran Ramasamy, the tribunal noted that the Interim Resolution Professional (IRP) had “mechanically recommended” acceptance of the personal guarantor's application without considering his...

'Callous': NCLAT Pulls Up NCLT For Ignoring MCA Communication On Removal Of Promoter's Disqualification

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench set aside an order passed by the National Company Law Tribunal (NCLT) by which it had declared promoters of JC World Hospitality Pvt. Ltd. ineligible under section 29A of the Insolvency and Bankruptcy Code, 2016 (IBC) and quashed their resolution plan. The Bench comprising Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member) held that the NCLT had erred in declaring the promoters ineligible without appreciating...