NCLT Orders Opulent Infradevelopers' Directors To Repay Rs 10.46 Crore For Fraudulent Transactions

The National Company Law Tribunal (NCLT) at New Delhi has ordered suspended directors of insolvent Opulent Infradevelopers to personally contribute Rs 10.46 crore back to the company after finding that they ran the business “with intent to defraud creditors” by making unauthorised donations, advancing interest-free loans, falsifying accounts and booking fictitious expenses. The order was passed by Judicial Member Manni Sankariah Shanmuga Sundaram and Technical Member Atul Chaturvedi on an...

NCLT Mumbai Rejects Indo Global Employees' Claims Filed 18 Months Late, Says Stakeholders Must Be Vigilant

The National Company Law Tribunal (NCLT) at Mumbai has recently stressed that stakeholders must act within statutory timelines during a corporate insolvency resolution process, dismissing six applications filed by former employees of Indo Global Soft Solutions and Technologies Private Limited after finding that their claims had been submitted 18 months after the last date prescribed for filing claims under the Insolvency and Bankruptcy Code A Bench of Judicial Member K R Saji Kumar and Technical...

Liquidator Must Recover Assets Even If Attached By Third Parties, Attachment Cannot Override IBC: NCLT Bengaluru

The National Company Law Tribunal (NCLT) at Bengaluru has recently held that a liquidator must assume custody and control of all assets of a corporate debtor even when those assets have been seized or attached by third parties including investigating agencies, stating that such seizure cannot override the Insolvency and Bankruptcy Code. The order was passed by Judicial Member Sunil Kumar Aggarwal and Member Technical Radhakrishna Sreepada in an application filed by the liquidator of Welworth...

Buyers Of Commercial Units Are Not Homebuyers; Cannot Be Recognised As Financial Creditors: NCLT Mumbai

The National Company Law Tribunal at Mumbai has recently held that purchasers of commercial or industrial units cannot claim parity with homebuyers and are therefore not entitled to the special protection accorded to them under the Insolvency and Bankruptcy Code, which recognises homebuyers as financial creditors. A coram of Judicial Member Mohan Prasad Tiwari and Technical Member Charanjeet Singh Gulati rejected an industrial unit purchaser's plea to be treated as a financial creditor. The...

NSEL Gets NCLT Nod For ₹1,950-Crore Settlement With 5,682 Traders Affected In 2013 Scam

The National Company Law Tribunal at Mumbai on Friday approved a Rs 1,950-crore one-time settlement for 5,682 traders affected by the 2013 National Spot Exchange Ltd (NSEL) scam, holding that the proposal met statutory requirements and did not violate public policy.A bench of Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar noted that the settlement had received 91.35% approval in value and over 92% in number from specified creditors who voted, and said its role was...

Investment On Profit-Sharing Basis Does Not Qualify As Financial Debt : NCLT Delhi Reaffirms

The National Company Law Tribunal at New Delhi has recently reaffirmed that an investment made on a profit-sharing basis does not constitute a financial debt under Section 5(8) of the Insolvency and Bankruptcy Code and therefore cannot be used to initiate insolvency proceedings under Section 7. The ruling came in a case where Modern Solar Private Limited sought to treat Rs 20 lakh advanced to Claro Energy Private Limited in 2013 as a loan carrying interest.A coram of Judicial Member Mahendra...

No Wilful Disobedience: NCLT Kochi Dismisses Bhagyodayam Company's Contempt Plea Against Ex-MD

The National Company Law Tribunal at Kochi has recently reiterated that simply failing to hand over company records to the tribunal appointed administrator, even after a specific direction from the tribunal, is not enough to initiate contempt unless there is clear proof that the person intended to defy the order. A coram of Judicial Member Vinay Goel and Technical Member Madhu Sinha dismissed a contempt plea filed by Kerala based-Bhagyodayam Company against its former Managing Director Paul...

SARFAESI Notice Counts As Valid Invocation Of Personal Guarantee: NCLT Mumbai

The National Company Law Tribunal at Mumbai has recently held that a notice issued under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002, which empowers a secured creditor to demand repayment of dues within sixty days prior to enforcing its security, can operate as a valid invocation of a personal guarantee when it contains a direct repayment demand addressed to the guarantor.A coram of Judicial Member K R Saji...

Securities Premium Account Cannot Offset Accumulated Losses: NCLT Bengaluru

The National Company Law Tribunal at Bengaluru has recently clarified that while a company may reduce its paid-up share capital to write off accumulated losses under Section 66 of the Companies Act, the securities premium account cannot be used for such write-off, as this is expressly prohibited under Section 52 of the Act. A coram of Judicial Member Sunil Kumar Aggarwal and Technical Member Radhakrishna Sreepada partly allowed the petition filed by Firepro Systems Pvt Ltd, approving the...

Loss of ITC Due To Corporate Debtor's Default In GST Filing Is Not Operational Debt: NCLT Mumbai

The National Company Law Tribunal at Mumbai has recently held that operational creditors cannot claim GST-related dues arising from a corporate debtor's failure to file returns once the GST department has already lodged its own claim in liquidation. A coram of Judicial Member Mohan Prasad Tiwari and Technical Member Charanjeet Singh Gulati rejected the appeal filed by Instakart Services Pvt. Ltd in the liquidation of TopsGroup services and Solutions concluding that the claim “cannot be...

Tribunal's Power To Probe Company's Fraud Cannot Be Misused For Debt Recovery: NCLT Ahmedabad

The National Company Law Tribunal at Ahmedabad has recently held that Section 213 of the Companies Act, which empowers the tribunal to order an investigation into a company's affairs, cannot be invoked for recovery of unpaid dues. A Bench of Judicial Member Shammi Khan and Technical Member Sanjeev Sharma, while dismissing a creditor's plea seeking an investigation into United Petrofer Ltd, observed, “The adjudication of dishonoured cheques and monetary recovery necessarily lie within the...

Operational Creditor Cannot Become Financial Creditor Through Settlement: NCLT Mumbai

The National Company Law Tribunal (NCLT) at Mumbai has recently reaffirmed that an operational creditor cannot be converted into a financial creditor by way of a settlement with the corporate debtor. At the outset, the tribunal noted that Capacite Infraprojects Ltd was engaged only as a contractor for construction of 16 SRA buildings, and that the flats were never part of a real estate transaction between the parties. The units came into the picture much later, when the real estate developer,...