Decision To Liquidate Corporate Debtor Cannot Be Faulted When Revival Is Not A Viable Option: NCLAT

The NCLAT New Delhi bench of Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha (Technical Member) and Mr. Indevar Pandey (Technical Member) has held that when it becomes clear that revival is not a viable option, a decision taken by the CoC to liquidate the corporate debtor cannot be faulted. Brief Facts: Principal Borrower M/s Universal Textile Waterproof Company (India) (UTWC) was granted term loans and working capital facilities by SVC Cooperative Bank in which Shri...

NCLAT Upholds Rejection Of Application U/S 9 Of IBC Against Hindustan Unilever Limited

The National Company Law Appellate Tribunal (NCLAT) bench of Justice Ashok Bhushan (Chairperson) and Arun Baroka (Technical Member) has dismissed the appeal against the order rejecting the application under section 9 of the Insolvency and Bankruptcy Code filed against Hindustan Unilever Limited on the ground that the claims were below the threshold limit, time-barred and there was a pre-existing dispute. Background Facts The Appellant-Operational Creditor had filed an application against...

Withdrawal Of Liquidation Application Can Be Permitted When CoC Allows RP To File Application Seeking Extension Of CIRP Time Period: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mita (Technical Member) and Mr. Arun Baroka (Technical Member) has held that when the CoC has already taken decision to file an application for extension of CIRP time period and granting permission to publish Form G for third time, withdrawal of liquidation application by Adjudicating Authority can be permitted. Brief Facts: The present appeal has been filed against an order passed by the Adjudicating...

Liquidation Proceeds Must Be Distributed Amongst Secured Creditors Based On Admitted Claims U/S 53 Of IBC: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member) and Mr. Barun Mita (Technical Member) has held that liquidation proceeds must be distributed as per section 53 of the IBC based on admitted claims of the respective secured creditors and cannot be distributed on the basis of security interest of different Secured Creditors. Brief Facts The corporate debtor was admitted into insolvency on the basis of an application filed by the State Bank of India under section 7 of...

Assets Of Subsidiary Can't Be Treated As Assets Of Holding Company In CIRP: NCLAT Sets Aside Order Directing Fresh Valuation Of Assets

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench comprising Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member) has observed that the assets of a subsidiary company cannot be treated as part of the assets of its holding company in a Corporate Insolvency Resolution Process (CIRP). The Tribunal held that the Adjudicating Authority does not have the jurisdiction to direct fresh valuation of such assets when they are owned by the subsidiary...

Claims Arising Under Section 11E Of Central Excise Act Cannot Be Treated As Secured Debt: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mita (Technical Member) and Mr. Arun Baroka (Technical Member) has held that claims arising under section 11E of the Central Excise Act, 1944 cannot be treated as a secured debt. It also held that “the 'Secured Interest' as defined under the Code excludes charges created by Operation of law. Section 11E of the Central Excise Act, 1944 is distinct from the provisions of 'Gujarat VAT Act, 2003' and therefore...

Delay Beyond 15 Days In Filing Appeal Cannot Be Condoned As Per Proviso To Section 61(2) Of IBC: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mita (Technical Member) and Mr. Arun Baroka (Technical Member) has held that delay in filing an appeal beyond 15 days as per section 61(2) proviso of the Insolvency and Bankruptcy Code cannot be condoned. Brief Facts: The present application has been filed seeking condonation of delay of 19 days in filing the appeal. The appellant submitted that the appeal has been filed within a period of limitation...

Insolvency Application Against Personal Guarantor Is Maintainable U/S 60(1) Of IBC Even If No CIRP Process Is Pending Against CD: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member) and Mr. Arun Baroka (Technical Member) has held that an application under section 95 of the Insolvency and Bankruptcy Code (Code) against the personal guarantor is maintainable before the NCLT under section 60(1) of the code even if no CIRP or Liquidation process is initiated or pending against the corporate debtor before the NCLT. Brief Facts The present appeals have been filed against an order passed by the...

NCLAT Stays Ban on WhatsApp's Data-Sharing Policy; Orders Meta To Pay 50% Of ₹213 Crore Penalty

The National Company Law Appellate Tribunal (NCLAT) bench of Justice Ashok Bhushan (Chairperson) and Arun Baroka (Technical Member) has granted partial relief to WhatsApp from the Competition Commission India's (CCI) order against its 2021 privacy policy update.The CCI had banned WhatsApp from sharing user data with Meta for advertising purposes for 5 years and imposed a Rs. 213.14 crore penalty for violating sections 4(2)(c) and 4(2)(e) of the Competition Act by using its dominant position to...

Period Of Moratorium U/S 101 Of IBC Cannot Be Extended Beyond 180 Days: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mita (Technical Member) and Mr. Arun Baroka (Technical Member) has held that the period of moratorium beyond 180 days as provided under section 101 of the IBC cannot be extended.It further held that “when the statutory scheme is clear and unambiguous, there is no role of any interpretive process to find out the jurisdiction of NCLT to extend the period of Moratorium when statute provides a date for cessation of the...

Adjudicating Authority Can Recall Orders Obtained Through Fraud Under Rule 11 Of NCLT Rules: NCLAT

The National Company Law Appellate Tribunal (NCLAT) bench comprising Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) has observed that where the Adjudicating Authority has been made to rely on distorted facts which the Adjudicating Authority became aware of belatedly, the Adjudicating Authority can always invoke its inherent powers under Rule 11 of NCLT Rules in order to protect itself and to prevent an abuse of its process. Brief...

Issue Of Maintainability Of Application U/S 7 Of IBC Can Be Decided Separately By Adjudicating Authority: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member) and Mr. Arun Baroka (Technical Member) has held that the issue of maintainability of application under section 7 of the code can either be decided separately or with other substantive issues. Brief Facts The present appeal has been filed by the corporate debtor against an order passed by the NCLT. The respondent filed an application under section 7 of the code seeking initiation of the insolvency process against...