Personal Criminal Liability Of Directors U/S 138 NI Act Survives Corporate Liquidation Under IBC: Himachal Pradesh High Court

The Himachal Pradesh High Court has reiterated that liquidation of a company under the IBC does not shield its directors from personal criminal liability in cheque bounce cases under Section 138 of the Negotiable Instruments Act, 1881(“N.I Act”) “15. ….Therefore, the orders passed by the learned Trial Court ordering the continuation of the proceedings against accused nos. 2 and 3 cannot be faulted.” Justice Rakesh Kainthla dismissed two petitions filed under Section 482 CrPC by...

Delhi High Court Upholds Liability Of Company To Reimburse Official Liquidator's Security Expenses For Safeguarding Corporate Assets

A division bench of the Delhi High Court, comprising Justice Anil Kshetrapal and Justice Harish Vaidyanathan Shankar, has upheld the liability of a company to reimburse the official liquidator's security expenses for safeguarding corporate assets. Background of the Case The winding-up process of the appellant company (M/s Connoisseur Buildtech Pvt. Ltd.) was going on in the year 2016. A disputed plot of the company was there in Greater Noida, which was secured by the official...

Gujarat High Court Approves One-Time Ex-Gratia Payment For Company-Paid Staff Of Official Liquidator's Office

The Gujarat High Court has approved a one-time ex-gratia welfare payment to 12 company-paid staff employed under the office of the official liquidator. “The welfare measure of a one-time ex-gratia payment is justified in equity provided that it doesn't prejudice the entitlement of stakeholders in liquidation proceedings,” Hon'ble Mrs. Justice Mauna M. Bhatt. Background The official liquidator filed the report seeking the High Court's direction to invest ex-gratia amounts from...

Consumer Complaint Is Not Maintainable Against Corporate Debtor During Subsistence Of Moratorium: Bombay High Court

The Nagpur Bench of the Bombay High Court, comprising of Justice M.M. Nerkiar, has held that the consumer complaint before the District Consumer Dispute Redressal is not maintainable if the insolvency of the corporate debtor has been admitted during the continuance of the moratorium. The petition was filed against the order of the District Consumer Dispute Redressal. In the impugned order the commission had directed the petitioner to return the JCB machine to the respondent. ...

NCLT President Cannot Transfer Cases Beyond Territorial Jurisdiction Of Bench: Gujarat High Court In Essar Steel Insolvency Case

The Gujarat High Court has recently held that the President of the National Company Law Tribunal (NCLT) has no authority to transfer cases from one State to another through administrative orders.The ruling came in proceedings linked to the Essar Steel insolvency process, where the court also found that repeated recusals by NCLT Members in Ahmedabad were neither "legal" nor "justified."A single bench of Justice Niral R Mehta made the finding in a petition filed by Arcelormittal Nippon Steel India...

S.238 IBC Is Non-Obstante Clause, Overrides Provisions Of Electricity Act: Allahabad High Court

The Allahabad High Court has held that the Insolvency and Bankruptcy Code, 2016 overrides the provisions of Electricity Act, 2003 read with Electricity Supply Code, 2005.A bench of Justice Arindam Sinha and Justice Prashant Kumar held“Section 238 of Insolvency and Bankruptcy Code, 2016 is a non- obstante clause meaning it grants the IB Code a power of overriding effect on other laws, for the time being in force, or any instrument that is inconsistent with it. This is a Special Section, which...

SARFAESI Act | Lending Banks Only Obligated To Consider Revival Scheme For NPA MSMEs If Borrower Claims Relief U/S 13(3A): Bombay High Court

The Bombay High Court bench, comprising Justice Suman Shyam and Justice Manjusha Deshpande, has held that the lending bank is obligated to consider the MSME revival scheme for classification of account as NPA only if it has been claimed by the MSME in response to the demand notice under Section 13(3A) of the SARFAESI Act. The petitioner's MSME unit took certain loans from ICICI Bank and the Technology Development Board (TBD). The ICICI Bank classified its account as NPA on February...

NCLT Has Jurisdiction U/S 60(5)(C) IBC To Adjudicate Lease Disputes In Liquidation Proceedings: Gujarat High Court

The Gujarat High Court bench led by Justice Niral R. Mehta held that the NCLT has jurisdiction under section 60(5)(c) of the IBC to adjudicate the lease and license dispute during the liquidation proceedings. The petitioners, Fivebro Water Services Pvt. Ltd. and another, had the lease and license agreements with the corporate debtor for its premises in Ahmedabad and Mumbai. Thereafter, the liquidation of the corporate debtor was ordered. The liquidator filed an application...

Cheque Dishonour Proceedings Can Be Sustained Against Directors & Signatories Of Company Even If It Is Declared Insolvent: Orissa High Court

The Orissa High Court, Bench comprising Justice Chittaranjan Dash, has ruled that the proceedings under section 138 of the NI Act will sustain against the directors or signatories of the company even if the entity has been declared insolvent under the IBC, 2016. The complainant extended a loan of Rs. 1 Cr. to Zenith Mining Pvt. Ltd., which remains unpaid. The check issued by the respondent was dishonored twice with the remark 'refer to drawer.' These events led the complainant to...

"Insolvency Professionals Acting Like Scavengers Must Be Dealt With Severely": Delhi High Court Slams Practitioner's Misconduct

The Delhi High Court recently slammed the conduct of a senior insolvency professional, warning that such individuals must not become “predators” of companies already in financial distress. In a scathing judgment, the Court said professionals under the Insolvency and Bankruptcy Code (IBC) must uphold the highest ethical standards and 'even a single act of negligence' is sufficient for a disciplinary actionThe judgment, delivered by Justice Subramonium Prasad on September 9, contained strong...

Civil Courts Cannot Grant Ex-Parte Injunction In Shareholder Disputes Due To Bar U/S 430 Companies Act: Calcutta High Court

The Calcutta High Court bench presided over by Justice Aniruddha Roy, has observed that a civil court cannot grant an ex parte ad interim injunction in a shareholder dispute, in light of the bar under section 430 of the Companies Act, 2013. The plaintiff filed a civil suit before the Civil Judge, Senior Division, Alipore, alleging that his shares in the Power Tools and Appliances Co. Pvt. Ltd. had been illegally reduced, usurping his control over the company. The court passed an...

Arbitral Proceedings Cannot Continue Once Moratorium Under IBC Is In Effect, Creditors' Recourse Lies Before Liquidator: Madras High Court

The Madras High Court bench of Justice N. Anand Venkatesh held that arbitration proceedings cannot continue after commencement of liquidation, any order passed thereafter is not legally sustainable. However, considering that continuation of arbitration proceedings would be futile and that the petitioner had not been informed of the commencement of the liquidation, the court allowed the petitioner to file its claim before the liquidator. Background: M/s. AL Tirven Steels Ltd. had...