IBC
NCLT Mumbai Orders Restoration of Pledged Shares, Holds Their Invocation During CIRP Moratorium Illegal
The National Company Law Tribunal (NCLT) at Mumbai has recently held that a financial creditor's invocation of pledged shares after the commencement of the Corporate Insolvency Resolution Process (CIRP) violated the moratorium under the Insolvency and Bankruptcy Code (IBC). It ruled that the creditor's contractual right to invoke the pledge could not override the statutory moratorium. A bench of Judicial Member Lakshmi Gurung and Technical Member Charanjeet Singh Gulati made the observations...
Interest-Bearing Inter-Corporate Loan Can Qualify As Financial Debt Under IBC: NCLT Kolkata
The National Company Law Tribunal (NCLT), Kolkata Bench, has held that an inter-corporate loan carrying interest qualifies as a "financial debt" under Section 5(8) of the Insolvency and Bankruptcy Code, 2016, provided it satisfies the twin requirements of time value of money and commercial effect of borrowing. The bench of Judicial Member Bidisha Banerjee and Technical Member Cmde Siddharth Mishra observed that Section 5(8) of the IBC neither expressly nor impliedly excludes inter-corporate...
NCLAT Revives Insolvency Plea Against Satnam Global Over ₹8 Crore Advance Paid Under Consortium Agreement
The National Company Law Appellate Tribunal (NCLAT), New Delhi, has held that Tech Lads India Pvt. Ltd.'s claim arising from an advance payment of ₹8 crore made to its consortium partner, Satnam Global Infraprojects Ltd., towards the supply of goods constituted an operational debt under the Insolvency and Bankruptcy Code, 2016. It found that the National Company Law Tribunal (NCLT) had erred in holding that the consortium agreement did not create any inter se commercial transaction between the...
Set-Off Under IBBI Liquidation Rules Applies Only Between Same Parties, Not Group Companies: NCLAT
The National Company Law Appellate Tribunal (NCLAT), New Delhi, has held that the benefit of set-off under the IBBI (Liquidation Process) Regulations, 2016 is available only where the mutual dealings are between the same parties and cannot be invoked to adjust dues owed by other group companies. The bench of Judicial Member Justice R.N. Seshasayee, Technical Member Arun Baroka, and Technical Member Indevar Pandey observed: “We observe that per Regulation 29 of the IBBI (Liquidation Process)...
NCLT Mumbai Holds Dev Land Transaction Fraudulent In Satra Properties Insolvency, Orders ₹24.45 Crore Repayment
The Mumbai Bench of the National Company Law Tribunal (NCLT), hearing proceedings arising from the corporate insolvency resolution process (CIRP) of Satra Properties (India) Ltd., has held that the forfeiture of ₹29.35 crore advanced by the company to Dev Land & Housing Pvt. Ltd. was a fraudulent transaction. It directed Dev Land & Housing and former director Praful Satra to jointly or severally contribute ₹24.45 crore to the assets of Satra Properties (India) Ltd. The tribunal...
NCLT Mumbai Admits IIFL Home Finance Insolvency Plea Against J-Seventy One Properties Over ₹2.42 Crore Default
The Mumbai Bench of the National Company Law Tribunal (NCLT) has admitted an insolvency plea filed by IIFL Home Finance Ltd. against J-Seventy One Properties and Pictures Pvt. Ltd. after finding that the company owed a financial debt of about ₹2.42 crore and had remained in default. Judicial Member Nilesh Sharma and Technical Member Sameer Kakar held that the financial debt and the continuing default were established through documentary evidence. "In view of the above, the Applicant has...
Commercial Wisdom Of Creditors No Bar To Judicial Scrutiny Of IRP Remuneration: NCLAT
The National Company Law Appellate Tribunal (NCLAT) at Delhi has recently held that disputes over an interim resolution professional's remuneration are not immune from judicial scrutiny merely because they arise from a decision of the Committee of Creditors (CoC). Clarifying the scope of the Supreme Court's ruling in K. Sashidhar, the tribunal held that the judgment, which concerns judicial review of the CoC's commercial decisions on resolution plans, could not be relied upon to decide...
NCLAT Sets Aside Rejection Of Insolvency Plea After Finding Corporate Debtor Had Admitted Outstanding Dues
The National Company Law Appellate Tribunal (NCLAT) at Delhi has set aside an order rejecting an insolvency application after finding that the corporate debtor had admitted outstanding dues in its reply to the statutory demand notice. The tribunal also found that the corporate debtor could not later adopt a contrary stand during the proceedings. "The litigant cannot be permitted to approbate and reprobate," it observed. A bench of Judicial Member Justice Mohd. Faiz Alam Khan and Technical...
Debenture Trustee Can Initiate Insolvency Against Personal Guarantor Under IBC Section 95: NCLAT Delhi
The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 30 June held that a debenture trustee, acting under a debenture trust deed and personal guarantee, can initiate insolvency proceedings against a personal guarantor under Section 95 of the Insolvency and Bankruptcy Code, 2016, and that clerical defects in guarantee documents do not defeat such proceedings where liability is otherwise established. Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra...
Settlement Breach Before CIRP Admission Cannot Sustain Section 9 Insolvency Proceedings: NCLT New Delhi
The New Delhi National Company Law Tribunal (NCLT) has held that once parties enter into a settlement agreement before admission of a Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016, any subsequent default arising from such settlement does not give rise to an “operational debt” and cannot sustain insolvency proceedings.A Bench comprising Judicial Member Mahendra Khandelwal and Technical Member Anu Jagmohan Singh noted that such disputed...
Patient Privacy Can't Bar RP's Access To Hospital Management System: NCLT Indore
The National Company Law Tribunal (NCLT) in Indore has ruled that suspended directors of a hospital undergoing insolvency proceedings cannot deny a resolution professional access to its Hospital Management System by citing patient-data privacy. It held that such access is necessary for the resolution professional to discharge statutory duties during the corporate insolvency resolution process. A bench of Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta passed the...
Monitoring Committee Cannot Override Fee Caps In Approved Resolution Plan: NCLT Bengaluru
The Bengaluru Bench of the National Company Law Tribunal (NCLT) on 22 June held that a Monitoring Committee cannot override or modify fee caps prescribed under an approved resolution plan through internal arrangements or mutual consent. Judicial Member Radhakrishna Sreepada and Technical Member Sunil Kumar Aggarwal partly allowed an application filed by Padmanabhan Nair against Successful Resolution Applicant (SRA) Pulkit Agarwal arising out of the implementation of the resolution plan of Trell...