NCLAT Rejects Pre-Existing Dispute Defence, Restores Ingram Micro Insolvency Plea Against Bathla Teletech

The New Delhi National Company Law Appellate Tribunal (NCLAT) on 21 May held that counterclaims relating to unrelated transactions cannot constitute a genuine pre-existing dispute under the Mobilox test and cannot defeat an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC). Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra set aside the National Company Law Tribunal (NCLT), Delhi order rejecting Ingram Micro India Private Limited's Section 9...

NCLAT Upholds Liquidation of Vrundavan Ceramic Pvt. Ltd., Cautions Against Delays In IBC Resolution

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 20 May dismissed two connected appeals filed by Lorenzo Vitrified Tiles Pvt. Ltd. (Successful Resolution Applicant) and Arvind Gaudana (Resolution Professional of Vrundavan Ceramic Pvt. Ltd.) and upheld an Order of the Ahmedabad National Company Law Tribunal (NCLT) directing liquidation of the corporate debtor.Judicial Member Justice Mohd Faiz Alam Khan and Technical Member Ajai Das Mehrotra held that the Insolvency...

Mortgage Created 7 Years After Debenture Deal Is Preferential Transaction In Radius Estate CIRP: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Delhi has held that a mortgage created nearly seven years after a financing agreement, and just weeks before the start of insolvency proceedings, amounted to a preferential transaction under the Insolvency and Bankruptcy Code. The tribunal dismissed Suraksha Realty Limited's appeal against the avoidance of its security interest in the corporate insolvency resolution process of Radius Estate Projects Pvt. Ltd The bench of Chairperson...

Only Central Government Can Order SFIO Probes, Not Company Tribunals: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Delhi has recently reiterated that company tribunals cannot directly order a Serious Fraud Investigation Office probe, ruling that the power to direct such an investigation rests with the Central Government. A bench of Judicial Member Justice Mohd. Faiz Alam Khan and Technical Member Naresh Salecha relying on its own earlier decision observed, "The procedure for investigation in the affairs of the company has been provided under Section...

Interim Resolution Professional Not Automatically Entitled To Full Fees Where Court Orders Restrict CIRP: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Delhi has upheld an equitable remedy granted by the National Company Law Tribunal (NCLT), ruling that an Interim Resolution Professional was not automatically entitled to full statutory fees where the insolvency process functioned under significant judicial restrictions. A bench of Chairperson Justice Ashok Bhushan and Technical Member Indevar Pandey dismissed the appeal filed by CMA Harshad Deshpande, former Interim Resolution Professional...

NCLAT Finds No Fault In Jet Airways Aircraft Auction, Rejects Losing Bidder's Challenge

The National Company Law Appellate Tribunal (NCLAT) has recently dismissed a challenge by a losing bidder to the auction of two Jet Airways aircraft during the airline's liquidation, holding that the process was transparent and that adequate opportunity had been given to inspect the assets before bidding.“The appellant's bid was lower to successful auction purchaser, the appellant was also given opportunity to inspect the Aircraft. No error can be found in the process adopted by liquidation...

NCLAT New Delhi Dismisses Shreenathji Infra Appeal, Finds Pre-Existing Dispute Bars IBC Action

On 19 May, the New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) dismissed an appeal filed by Shreenathji Infrastructure against Namasthetu Infratech Pvt. Ltd., holding that incomplete performance of work and termination of contracts by the Corporate Debtor reflected a pre-existing dispute and rendered insolvency petition non-maintainable. The Bench of Judicial Member Justice N. Seshasayee and Technical Member Arun Baroka observed: “We observe that there were many issues...

“Not Filed To Harass Or Embarrass”: NCLAT Sets Aside Rejection Of Lyka Labs' CIRP Plea Against Modi Lifecare

The National Company Law Appellate Tribunal (NCLAT) at Delhi has held that Lyka Labs' insolvency plea against Modi Lifecare Industries was not an attempt to “harass and/or embarrass and/or humiliate” the company. The tribunal found that the petition was based on material facts and that Modi Lifecare had not disputed an operational debt exceeding ₹1 lakh. A bench of Chairperson Justice Ashok Bhushan and Technical Members Barun Mitra and Arun Baroka set aside an Ahmedabad NCLT order rejecting...

Loan Or Promoter Funding? NCLAT Remands Insolvency Plea Against Jaikrishan Estates

The National Company Law Appellate Tribunal (NCLAT) at Delhi has remanded an insolvency plea filed by a former director of Jaikrishan Estates for fresh consideration, holding that the true nature of the alleged debt required fuller examination rather than summary rejection.“...we find the real nature of the debt to be questionable due to the existence of share purchase agreement, which is not on record and also the so called assignment by unrecoverable and unconditional gift deed dated...

NCLAT New Delhi Rejects PPL's Entry Tax Exemption Claim, Finds No "Deemed Consent" Under SICA

On 18 May, the New Delhi National Company Law Appellate Tribunal (NCLAT) held that the State of Orissa was not bound to grant Entry Tax exemptions to Paradeep Phosphates Ltd. (PPL) under a BIFR-sanctioned rehabilitation scheme, since the State had expressly refused consent during the proceedings. Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra dismissed PPL's appeal against the National Company Law Tribunal (NCLT), Cuttack Bench, noting that its express refusal excluded the...

NCLAT Rejects Venugopal Dhoot's Bid To Include Videocon Foreign Oil Assets In VIL CIRP

The National Company Law Appellate Tribunal (NCLAT) at Delhi on Friday held that the foreign oil and gas assets of Videocon Oil Ventures Ltd (VOVL) and its subsidiaries in Brazil and Indonesia cannot be included in the Corporate Insolvency Resolution Process (CIRP) of Videocon Industries Ltd (VIL). The bench of Judicial Member Yogesh Khanna and Technical Member Ajai Das Mehrotra set aside the Mumbai NCLT's February 12, 2020 order directing inclusion of these assets in VIL's information...

Company That Mortgaged Its Property For SBI Loan Of Corporate Debtor Cannot Be Treated As Financial Creditor: NCLAT

The National Company Law Appellate Tribunal at Delhi has held that in the facts of a case, a company that mortgaged its property to help a borrower secure a bank loan could not claim to be a financial creditor in the borrower's insolvency proceedings merely because it was promised interest in return. The ruling came in a case where a Raipur-based company had mortgaged its land to help Setubandhan Infrastructure Ltd. secure loan facilities from State Bank of India and later sought recognition as...