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...

Debenture Trustee Can Initiate Insolvency Against Personal Guarantor Under IBC Section 95: NCLAT Delhi

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 30 June held that a debenture trustee, acting under a debenture trust deed and personal guarantee, can initiate insolvency proceedings against a personal guarantor under Section 95 of the Insolvency and Bankruptcy Code, 2016, and that clerical defects in guarantee documents do not defeat such proceedings where liability is otherwise established. Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra...

Property Over Which Corporate Debtor Has No Subsisting Right Cannot Form Part Of Its CIRP: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Delhi has recently held that a corporate debtor cannot include in its Corporate Insolvency Resolution Process (CIRP) an immovable property over which it has no subsisting legal right. Setting aside an order of the National Company Law Tribunal (NCLT), Kolkata, the appellate tribunal allowed Calcutta Pinjrapole Society's plea to exclude its property from the CIRP of R.S. Iron Industries Pvt. Ltd. A bench of Chairperson Justice Ashok...

Interim Stay Of CIRP Admission Does Not Extinguish Moratorium Unless Specifically Vacated: NCLAT

The tribunal further held that a second CIRP cannot be initiated against the same corporate debtor during the subsistence of an earlier CIRP and moratorium

NCLAT Delhi Holds Fraudulent Account Transfer Not Financial Debt Under IBC, Dismisses Progfin's Appeal

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 30 June held that the mere disbursal of loan funds into a fraudulent bank account does not, by itself, create a binding financial debt under the Insolvency and Bankruptcy Code, 2016. Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra dismissed Progfin Pvt. Ltd.'s appeal and upheld the National Company Law Tribunal's rejection of its Section 7 application against Ganesh Benzoplast Ltd. (GBL). The Bench...

Resolution Professional's Report Is Recommendatory In Personal Guarantor Insolvency Cases: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Chennai has held that a Resolution Professional's report in personal insolvency cases is only recommendatory and does not bind the adjudicating authority.It ruled that where debt, default, and the status of the personal guarantor are already established, the absence of such a report does not invalidate the proceedings. A coram of Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain observed, “Upto the stage...

NCLT Cannot Sit In Appeal Over Civil Court Consent Decree In Insolvency Proceedings: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Delhi has held that the National Company Law Tribunal (NCLT) cannot disregard or invalidate a consent decree passed by a competent civil court during insolvency proceedings. It ruled that if a resolution professional or financial creditors seek to challenge such a decree, they must approach the civil court. A bench of Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra observed,“The Adjudicating Authority does not have any...