Penal Charges In Debt Claim Do Not Oust NCLT's IBC Jurisdiction: Gujarat High Court

The Gujarat High Court, on 23 October, held that the inclusion of penal charges and interest in a financial creditor's claim does not, by itself, oust the National Company Law Tribunal's (NCLT) jurisdiction to entertain an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). Justice Nisha M. Thakore dismissed a writ petition filed by Takshashila Resicom Private Limited and its directors challenging the NCLT Ahmedabad Bench's orders admitting insolvency proceedings...

Insolvency Moratorium Does Not Bar Corporate Debtor From Pursuing Counterclaims: Bombay High Court

The Bombay High Court has held that an insolvency moratorium does not prevent a corporate debtor from pursuing its own claims in arbitration, including a counterclaim against the party that initiated proceedings against it. Justice Somasekhar Sundaresan observed, “Section 14(1)(a) of the IBC interdicts the institution and continuation of proceedings against the corporate debtor. It does not bar proceedings initiated by the corporate debtor, including a Counter Claim.” The dispute...

Company Sold As Going Concern During Liquidation Cannot Automatically Escape GST Liabilities: Madras High Court

The Madurai Bench of the Madras High Court has held that a company sold as a going concern during liquidation cannot claim that its liabilities are automatically extinguished under the clean-slate principle of insolvency law. Justice C. Saravanan observed that a buyer acquiring a corporate debtor as a going concern takes over its assets and liabilities as a package, and cannot avoid liabilities merely because the company has undergone liquidation. The Court made the observations while hearing...

Kerala High Court Refuses To Stay Byju's Insolvency, Admits Review Plea Seeking CBI, ED Probe

The Kerala High Court on Tuesday refused to stay the corporate insolvency resolution process (CIRP) of Think and Learn Private Limited, the parent company of BYJU'S. The Court admitted a review petition alleging that a document relied on by GLAS Trust Company LLC to establish its authority to represent lenders was forged. A Division Bench of Justice K. Natarajan and Justice Johnson John was hearing the petition filed by Voizzit Technology Private Limited and Voizzit Information Technology LLC....

Stamp Duty On NCLT-Liquidated Property Can Be Based On Auction Price, Not ASR Rates: Bombay High Court

The Bombay High Court has held that stamp duty on property sold through a liquidation auction conducted by an NCLT-appointed liquidator can be calculated on the auction value rather than the Annual Statement of Rates (ASR) value when the auction process is transparent and there is no basis to suspect deliberate undervaluation.The Court rejected the Maharashtra Advocate General's argument that the National Company Law Tribunal (NCLT) could not be treated as a civil court for this purpose. It held...

Can Companies In Liquidation Seek Exemption From GST Pre-Deposit To File Appeals? Delhi High Court To Examine

The Delhi High Court will examine whether companies undergoing liquidation can seek exemption from the mandatory pre-deposit requirement under Section 107(6) of the Central Goods and Services Tax (CGST) Act. The issue is whether the requirement can be relaxed in view of the statutory distribution mechanism under the Insolvency and Bankruptcy Code (IBC).A Division Bench of Justices Anil Kshetarpal and Bharat Parashar requested Additional Solicitor General of India Raghavendra Shankar to assist...

Attempt To Transfer Property To Defeat Creditors Not 'Act Of Insolvency' Under Provincial Insolvency Act: Madras HC

The Madras High Court at Madurai recently held that an attempt by a debtor to transfer property to defeat creditors may justify attachment before judgment under Order 38 of the Code of Civil Procedure (CPC). However, such an attempt by itself does not amount to an “act of insolvency” under Section 6 of the Provincial Insolvency Act, 1920.“Attempting to transfer one's property to defeat the interest of the creditors can be a good ground for attaching the property before judgment under Order 38 of...

DEL Status Cannot Continue For Pre-CIRP Defaults After IBC Resolution Plan: Delhi High Court

The Delhi High Court has held that continuing a company's Denied Entry List (DEL) status to enforce export obligations arising before the commencement of its insolvency proceedings would violate the “clean slate” principle under the Insolvency and Bankruptcy Code (IBC). This would apply where the monetary liabilities arising from those defaults have been settled under an approved resolution planJustice Amit Mahajan made the observation while allowing a petition filed by Waaree Transpower...

Pending Suit Against Company Under Liquidation Requires NCLT Leave To Proceed: Patna High Court

The Patna High Court has held that a pending commercial suit involving a company under liquidation cannot proceed without leave of the National Company Law Tribunal (NCLT)."once a winding up order is passed, no suit or other legal proceedings shall be commenced or if pending at the date of the winding up order, shall be proceeded with, by or against the company except with the leave of the Tribunal and subject to such terms that the Tribunal may impose,” a Bench of Justices Rajeev Ranjan Prasad...

Orissa High Court Quashes Air Pollution Case Against Tata Steel Over Bhushan Steel's Pre-CIRP Offences

The Orissa High Court has quashed criminal proceedings against Tata Steel Limited (TSL) arising from alleged violations of the Air (Prevention and Control of Pollution) Act, 1981 by erstwhile Bhushan Steel Limited (BSL).A coram of Justice Sibo Sankar Mishra was dealing with a petition filed by TSL under Section 482 of the Criminal Procedure Code seeking quashing of proceedings pending before the SDJM, Dhenkanal, as well as the order taking cognizance against the company. The State Pollution...

Kerala High Court Keeps Coercive Proceedings Against KHFL RP In Company-Related Criminal Cases In Abeyance

The Kerala High Court on Tuesday directed authorities to keep coercive proceedings against the Resolution Professional of Kerala Housing Finance Limited (KHFL) in abeyance in cases concerning the company. It, however, clarified that proceedings against the other accused can continue.Justice G. Girish passed the interim order on a petition filed by P.D. Vincent, the Resolution Professional of KHFL, which was admitted into the Corporate Insolvency Resolution Process (CIRP) by the NCLT Kochi in...

Tax Authorities Cannot Recover Pre-CIRP Dues Extinguished Under Resolution Plan: Bombay High Court

The Bombay High Court on 7 September held that tax authorities cannot continue recovery proceedings for pre-CIRP dues extinguished under an NCLT-approved Resolution Plan. A Division Bench of Justices M.S. Karnik and Sandesh D. Patil allowed a writ petition filed by Aarem Insights Pvt. Ltd., formerly known as Shop CJ Network Pvt. Ltd., and directed the State tax authorities to refund the statutory pre-deposit of Rs. 31,99,174 made by the company for pursuing its MVAT appeal, along with...