Shareholder Is Not An “Aggrieved Person” To Challenge Resolution Plan Approval Under IBC: NCLAT Cites Park Energy

The National Company Law Appellate Tribunal (NCLAT) at Delhi has held that a shareholder, merely in that capacity, cannot maintain an appeal against an order approving a resolution plan under Section 61 of the Insolvency and Bankruptcy Code (IBC).The court relied on its earlier larger Bench ruling in Park Energy Pvt. Ltd. v. State Bank of India and another. It held that the ruling continues to bind the tribunal because it was delivered by a specially constituted Bench and was later affirmed by...

CIRP Expiry Without Resolution Plan Mandates Liquidation, Failed CoC Liquidation Vote Irrelevant: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Delhi has recently held that once the insolvency resolution period expires without receipt of a resolution plan or a valid extension, liquidation becomes mandatory under the Insolvency and Bankruptcy Code (IBC).It also held that a failed vote on a separate liquidation proposal or expressions of interest received after the deadline cannot revive an expired insolvency process.“We therefore hold that once the CIRP period expired without receipt...

Personal Guarantors Cannot Revive Appeals After OTS Fails Due to Their Own Default: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Delhi has recently refused to restore appeals filed by three personal guarantors after a ₹4.60 crore One-Time Settlement (OTS) with Indian Bank failed. The tribunal held that the guarantors could not rely on the liberty granted in an earlier order to take advantage of their own default.“Certainly the appellants or principal borrower who appears to be at fault by not honoring the OTS may not take the advantage of their own wrong,” the bench...

Reliance Brand Dispute: NCLAT Dismisses ADAVL Appeal After Reliance Capital Becomes IndusInd

The National Company Law Appellate Tribunal (NCLAT) has recently dismissed as infructuous an appeal concerning the use of the “Reliance” brand name by IndusInd International Holdings Ltd (IIHL) following its takeover of Reliance Capital.The appeal was filed by Anil Dhirubhai Ambani Ventures Pvt. Ltd. (ADAVL), which had challenged the Mumbai bench of the National Company Law Tribunal's (NCLT) decision allowing IIHL to use the “Reliance” name as part of its takeover of Reliance Capital. The appeal...

NCLAT Directs NCLT To Hear Collusion Plea Before Deciding Insolvency Case

The National Company Law Appellate Tribunal (NCLAT) at Delhi has recently directed the NCLT, Mumbai Bench, to first decide an application filed by a sugar cooperative alleging that a Section 7 insolvency case against a company was collusive and could prejudice its rights.The tribunal said this was warranted by the peculiar facts of the case. The cooperative was not a party to the insolvency proceedings but claimed that its sugar factory and property could be affected.“In all judicial fairness,...

ESI Contributions Cannot Be Treated As Ordinary Operational Debt Under IBC: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Chennai has held that ESI contributions covered by the statutory trust mechanism cannot be treated as ordinary operational debt merely because the Employees State Insurance Corporation filed its claim as an operational creditor. “Once the ESI contributions are held to be amounts entrusted for the statutory purpose contemplated under the ESI Act and consequently excluded under Section 36(4)(a)(i), they cannot be treated as an ordinary...

Personal Guarantor Who Settled Company Debt Cannot Claim Financial Creditor Status: NCLAT

The National Company Law Appellate Tribunal (NCLAT), Chennai, has held that a personal guarantor who settled a corporate debtor's dues with its financial creditor, did not become a financial creditor in the liquidation proceedings.A bench of Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain found that there was no assignment of the debt in S.V. Ramasamy's favour. He had also not sought substitution of Tamil Nadu Mercantile Bank (TMB) in the liquidation...

OTS Failure Cannot Create Fresh Default For CIRP, Original Debt Position Revives: NCLAT Chennai

On 28 September, the National Company Law Appellate Tribunal (NCLAT) at Chennai held that failure to comply with the terms of a One-Time Settlement (OTS) does not constitute a fresh default for initiating the Corporate Insolvency Resolution Process (CIRP). A Bench comprising Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain held: “Under an OTS, the principal loan does not remain alive. Therefore, missing the timeline for paying OTS amount which is a...

Subsequent CIRP Makes Earlier Appeal Against Insolvency Rejection Infructuous: NCLAT New Delhi

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 18 September held that an appeal against rejection of a creditor's application to initiate Corporate Insolvency Resolution Process (CIRP) becomes infructuous once CIRP has already commenced against the same Corporate Debtor in a subsequent proceeding. A Bench comprising Judicial Member Justice Sharad Kumar Sharma with Technical Members Arun Baroka and Indevar Pandey held that a second, parallel CIRP cannot be...

Restoration Plea Filed Beyond 30 Days Can't Be Entertained Without Condonation Of Delay: NCLAT Delhi

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT) at New Delhi, on 18 September held that an application seeking restoration of a company petition dismissed for non-appearance under Rule 48(2) of the NCLT Rules, 2016 must be filed within 30 days of the dismissal. If filed beyond this period, the applicant must first seek condonation of delay. A Bench comprising Judicial Member Justice Sharad Kumar Sharma with Technical Members Arun Baroka and Indevar Pandey upheld the...

NCLAT Issues Notice To Eros On Phantom Studios' Insolvency Appeal

The National Company Law Appellate Tribunal (NCLAT), New Delhi, has issued notice to Eros International Media Ltd. in an appeal filed by Phantom Studios India Pvt Ltd against dismissal of its insolvency plea.The matter was heard by Judicial Member Justice Mohd Faiz Alam Khan and Technical Member Naresh Salecha. Although no one appeared for Phantom, the bench issued notice after noting that the Mumbai Bench of the National Company Law Tribunal (NCLT) had dismissed the insolvency petition.Earlier,...

Litigant Cannot Suffer For Counsel's Deliberate Non-Appearance: NCLAT Restores Electricity Dues Claim

The National Company Law Appellate Tribunal (NCLAT) has observed that litigants should not be made to suffer when lawyers, because of professional misunderstandings, grudges or monetary disputes, stop effectively pursuing their cases.The tribunal noted that such conduct can ultimately defeat a litigant's cause. It held that a litigant cannot be blamed for the “deliberate act of Counsel” when the Vakalatnama continues to remain in force.“...in this professional era of cut throat competition, such...