Dismissal Of DRT Recovery Case For Default Does Not Bar Insolvency Proceedings Against Personal Guarantor: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Delhi has held that the dismissal of a debt recovery case for default does not wipe out the underlying debt or prevent insolvency proceedings against a personal guarantor. It dismissed an appeal filed by a personal guarantor challenging the National Company Law Tribunal's (NCLT) order admitting the Bank of Maharashtra's application. A bench of Judicial Member Justice N. Seshasayee and Technical Member Indevar Pandey observed: “Dismissal...

Gratuity Payable To Retiring Employee Cannot Be Equated With Salary, Not Part Of CIRP Costs: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Delhi has held that gratuity payable to an employee who retires during the corporate insolvency resolution process cannot be treated as part of the insolvency resolution process costs. It held that gratuity is a terminal benefit and not an expense incurred by the Resolution Professional (RP) in running the insolvency process.A bench of Judicial Member Justice N. Seshasayee and Technical Members Arun Baroka and Indevar Pandey upheld an order...

Pending Compromise Scheme No Bar To Insolvency Proceedings: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Delhi has held that a proposed scheme of compromise under the Companies Act and ongoing one-time settlement (OTS) negotiations cannot prevent the admission of insolvency proceedings once financial debt and default are established.A bench of Judicial Member Justice N. Seshasayee and Technical Members Arun Baroka and Indevar Pandey held that the National Company Law Tribunal (NCLT) was justified in admitting insolvency proceedings against...

CoC-Approved Valuation Cannot Be Reopened At Instance Of Suspended Director: NCLAT New Delhi

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 14 July held that a suspended director cannot seek fresh valuation of a corporate debtor's assets after the Committee of Creditors (CoC) has approved the valuation reports and the resolution plan. Valuation decisions fall within the CoC's commercial wisdom. Judicial Member Justice Mohd Faiz Alam Khan and Technical Member Naresh Salecha dismissed appeals filed by Santosh R. Shetty, suspended director and promoter of...

NCLAT Dismisses Jaypee Greens Homeowners' Appeals Seeking Social Club Condition In JAL Resolution Plan

The National Company Law Appellate Tribunal (NCLAT) in Delhi has dismissed appeals filed by the Association of Independent House Owners of Jaypee Greens, refusing to interfere with an order declining to direct the inclusion of a mandatory condition in Jaiprakash Associates Ltd's resolution plan for the construction of a social club. The appellate tribunal noted that the resolution plan had already been approved. It also took note of the Successful Resolution Applicant's (SRA) undertaking to...

NCLAT Sets Aside NCLT Order Applying Corporate Insolvency Threshold To Personal Insolvency Plea

The National Company Law Appellate Tribunal (NCLAT) in Delhi has set aside an order of the National Company Law Tribunal (NCLT) that dismissed a personal insolvency application after applying the minimum default threshold applicable to corporate insolvency proceedings. The appellate tribunal has remanded the matter to the NCLT Chandigarh for fresh consideration. A bench of Judicial Member Justice N. Seshasayee and Technical Member Barun Mitra held that the application must be reconsidered in...

IBC Does Not Require Prior CIRP Against Corporate Debtor To Initiate Guarantor Insolvency: NCLAT Delhi

The New Delhi National Company Law Appellate Tribunal (NCLAT) on 14 July held that financial creditors can directly initiate insolvency proceedings against personal guarantors without any pending Corporate Insolvency Resolution Process (CIRP) or liquidation proceedings against the corporate debtor. Judicial Member Justice Mohd Faiz Alam Khan and Technical Member Naresh Salecha allowed appeals filed by UCO Bank against orders of the Kolkata Bench of the National Company Law Tribunal (NCLT),...

NCLAT Issues Notice In Jiostar's Appeal Against Rejection Of Insolvency Plea Against Absolute Legends

The National Company Law Appellate Tribunal (NCLAT) on Monday issued notice in an appeal filed by Jiostar India Pvt. Ltd. against an order rejecting its insolvency plea against Absolute Legends Sports Pvt. Ltd., the promoter of the Legends League Cricket Masters T20 tournament. The appellate tribunal observed that the National Company Law Tribunal (NCLT) had failed to consider Jiostar's contention that the Media Rights Agreement had been duly signed on its behalf by Ankush Mahajan. A bench of...

Liquidator's Sale Of Corporate Debtor's Shell Entity Valid After Creditor Consultation: NCLAT New Delhi

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 14 June held that a liquidator can sell the shell legal entity of a corporate debtor through public auction during liquidation after consulting creditors, where all assets of the corporate debtor have already been realised and dissolution is the only remaining option. Judicial Member Justice Mohd Faiz Alam Khan and Technical Member Naresh Salecha upheld the sale of Abhijeet MADC Nagpur Energy Pvt. Ltd.'s legal entity,...

IBC Cannot Be Used to Validate Illegal Constructions Or Defeat Town Planning Laws: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Delhi has held that while a corporate debtor's subsisting contractual and development rights under a hire-purchase agreement may constitute assets under the Insolvency and Bankruptcy Code (IBC), the insolvency process cannot be used to legitimise unauthorised construction or defeat statutory town planning laws. A bench of Judicial Member Justice Mohd. Faiz Alam Khan and Technical Member Naresh Salecha observed: “We emphasise that...

NCLAT New Delhi Upholds CIRP Against Simbhaoli Sugar, Holds Farmers' Claims Must Be Considered

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 13 July upheld the admission of Corporate Insolvency Resolution Process (CIRP) against Simbhaoli Sugar Limited, holding that the insolvency proceedings were initiated independently of the Reserve Bank of India (RBI) circular later struck down by the Supreme Court. Officiating Chairperson Justice Yogesh Khanna and Technical Member Ajai Das Mehrotra dismissed appeals filed against the order of the Allahabad Bench of the...

Acknowledged Interest On ICDs Forms Part Of Financial Debt Under IBC: NCLAT New Delhi

On 13 July, the New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) held that acknowledged interest on Inter Corporate Deposits (ICDs) forms part of “financial debt” under the Insolvency and Bankruptcy Code, 2016 (IBC). Judicial Member Justice N Seshasayee, along with Technical Members Indevar Pandey and Arun Baroka, allowed an appeal filed by Wild Dreams Trading Company Pvt. Ltd. against the Chandigarh Bench of the National Company Law Tribunal (NCLT), which had rejected its...