Expeditious Resolution Under IBC Cannot Override Natural Justice: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Delhi has held that the objective of speedy insolvency resolution under the Insolvency and Bankruptcy Code cannot come at the cost of fairness, setting aside an order that had closed a corporate debtor's right to file its reply in a pending insolvency case.A bench of Judicial Member Justice N. Seshasayee and Technical Member Indevar Pandey observed: “The objective of the Code is undoubtedly expeditious resolution. However, such expeditious...

Separate Legal Personality Can't Shield Related Party From Disclosing Information on Corporate Debtor: NCLAT

The National Company Law Appellate Tribunal (NCLAT) has held that a related party cannot rely on its separate legal personality to refuse disclosure of financial information sought by a Resolution Professional where the information has a direct nexus with the corporate debtor's transactions and arrangements. A coram of Judicial Member Justice N. Seshasayee and Technical Members Indevar Pandey and Arun Baroka observed,“Separate legal personality cannot become a shield against disclosure,...

'Endless Indulgence' Under Guise Of Resolution Defeats IBC's Purpose: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Delhi has observed that the Insolvency and Bankruptcy Code (IBC) is intended to maximise value through a time-bound resolution process and cannot permit indefinite delays in implementing an approved resolution plan. Applying that principle, it upheld the liquidation of Ushdev International Limited after its approved resolution plan remained unimplemented for more than three years. A bench of Judicial Member Justice N. Seshasayee and...

Order Passed On Mistaken Facts Cannot Be Basis For Contempt: NCLAT

The National Company Law Appellate Tribunal (NCLAT) has dismissed a contempt petition against a liquidator after holding that an order passed under a mistaken impression of facts cannot be enforced through contempt proceedings. A bench of Judicial Member Justice N. Seshasayee and Technical Member Indevar Pandey observed, “The Order passed on a mistaken impression about the existence of a fact, therefore, can neither be understood as a direction to restore a certain status quo ante, nor can it...

IBC S.121(2) Timeline For Personal Guarantor Bankruptcy Applications Directory, Not Mandatory: NCLAT

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 30 June held that the three month period prescribed under Section 121(2) of the Insolvency and Bankruptcy Code, 2016 (IBC) for filing a bankruptcy application against a personal guarantor is directory and not mandatory. Judicial Member Justice N Seshasayee and Technical Member Arun Baroka set aside the order of the Cuttack Bench of the National Company Law Tribunal (NCLT), which had dismissed Cosmos Co Operative Bank...

Continuation Of CIRP By Sole Creditor Despite Full Repayment Is Malicious Use Of IBC: NCLAT Delhi

The New Delhi National Company Law Appellate Tribunal (NCLAT) on 30 June held that continuation of insolvency proceedings by a sole creditor despite full repayment of the debt amounted to malicious use of the Insolvency and Bankruptcy Code (IBC), which is intended for revival of corporate debtors and not for pursuing coercive or vindictive action. Judicial Member Justice N Seshsayee and Technical Members Arun Baroka and Indevar Pandey terminated the Corporate Insolvency Resolution Process...

Creditors Cannot Question RP's Information Requests During Claim Verification: NCLAT New Delhi

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 30 June held that a creditor cannot question the information or clarifications sought by a Resolution Professional (RP) during verification of claims in the Corporate Insolvency Resolution Process (CIRP), as the RP is statutorily empowered to seek evidence necessary for substantiation of claims. Judicial Member Justice N. Seshasayee and Technical Member Arun Baroka dismissed the appeal filed by the New Okhla...

OTS Breach Revives Original Loan Liability; Creditor Can Recover Full Dues: NCLAT New Delhi

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 30 June held that breach of a One-Time Settlement (OTS) revives the corporate debtor's original liability under the loan agreement, entitling the financial creditor to proceed on the basis of the original debt. Judicial Member Justice N. Seshasayee and Technical Member Arun Baroka dismissed the appeal filed by Gaurav Jaiswal, suspended director of JHV Sugar Ltd., challenging a National Company Law Tribunal (NCLT),...

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)...

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...