Dissolution Under IBC Can't Be Used To Frustrate Ongoing PMLA Proceedings: NCLT Delhi

The National Company Law Tribunal (NCLT), New Delhi bench of Shri Bachu Venkat Balaram Das and Dr. Sanjeev Ranjan (Technical Member) rejected an application seeking dissolution of M/s Shakti Bhog Snacks Limited under Section 54 of the Insolvency and Bankruptcy Code, 2016. The Tribunal held: “Dissolution under Section 54 of the IBC results in the Corporate Debtor ceasing to exist as a legal entity. Such a consequence would inevitably frustrate the ongoing criminal prosecution under the...

Application U/S 7 Of IBC Can Be Admitted In Absence Of NeSL Certificate If Loan Disbursal & Default Are Proved By Other Documents: NCLT Mumbai

The National Company Law Tribunal (NCLT) Mumbai bench of Justice V.G Bisht, (Retd). and Prabhat Kumar (Technical Member ) has held that even in the absence of a NeSL certificate, an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 can be admitted if the disbursal of the loan amount and occurrence of default are established through other reliable and relevant documents. Brief Facts: The Corporate Debtor was incorporated on 01.10.2015 under the provisions of the...

Corporate Debtor Can't Deny Transaction For Which It Earlier Gave Approval: NCLT Delhi

The National Company Law Tribunal Bench of Shri Mahendra Khandelwal (Judicial Member) and Shri Atul Chaturvedi (Technical Member) upheld a Section 9 petition filed under the Insolvency & Bankruptcy Code, 2016 (“the Code”) stating that if the Corporate Debtor has given its approval for an amendment in the wage structure, it can't deny it later. Background Facts: M/s. Liberium Global Resources Private Limited (Operational Creditor) initiated insolvency proceedings under Section 9...

Interest-Free Debt Must Involve Time Value Of Money To Qualify As Financial Debt: NCLT Delhi

The National Company Law Tribunal Bench of Shri Mahendra Khandelwal (Judicial Member) and Shri Atul Chaturvedi (Technical Member) dismissed a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“the code”) stating that when the loan is granted without any interest it should have a consideration of time value of Money. Background Facts: Mr. Sunil Chopra, Financial Creditor extended an interest-free, unsecured loan of ₹6,73,00,000/- to the Corporate Debtor, CAPL...

Absence Of Formal Written Agreement Does Not Preclude Establishment Of Financial Debt: NCLT Delhi

The National Company Law Tribunal Bench of Shri Mahendra Khandelwal (Judicial Member) and Shri Atul Chaturvedi (Technical Member) the absence of a formal loan agreement does not defeat the existence of a financial debt. Documentary evidence such as tax filings (Form 26AS), TDS deductions, ledger entries, financial statements, and written acknowledgments are sufficient to establish a Financial Debt under Section 5(8) of the Insolvency & Bankruptcy Code, 2016. Background Facts: The...

Merely Extending Financial Assistance Can't Be Considered As Loan In Absence Of A Loan Agreement: NCLT Delhi

The National Company Law Tribunal Bench of Shri Mahendra Khandelwal (Judicial Member) and Shri Atul Chaturvedi (Technical Member) dismissed a Section 7 application filed under the Insolvency & Bankruptcy Code, 2016 (“the code”) holding that merely providing financial assistance can't be construed as a short-term or long-term loan in the absence of a formal loan agreement. Background Facts: In May 2019, the Corporate Debtor approached the Financial Creditor seeking a borrowing of...

Non-Payment Of Outstanding Lease Rent Amounts To Operational Debt: Nclt Delhi

The National Company Law Tribunal (NCLT), New Delhi bench of Shri Mahendra Khandelwal (Judicial Member) and Shri Atul Chaturvedi (Technical Member) held that when the lease amount is unpaid by the Corporate Debtor it amounts to Operational Debt under the Insolvency & Bankruptcy Code, 2016 (“the Code”). Background Facts: M/s Unified Credit Solutions Private Limited (Operational Creditor) had it's office at 7th Floor, 715, DLF Star Tower, Sector- 30, NH-8, Gurugram, Haryana 122001....

Corporate Applicant Can't Take Shield Of CIRP To Avoid Legally Recoverable Government Dues: NCLT Delhi

The National Company Law Tribunal Bench of Shri Mahendra Khandelwal (Judicial Member) and Shri Atul Chaturvedi (Technical Member) dismissed a Section 10 application filed under the Insolvency & Bankruptcy Code, 2016 (“the code”) holding that the Corporate Applicant cannot take the shield of CIRP to avoid the legally recoverable government dues. Background Facts: M/s Imperial Banquets & Dining Private Limited ('Corporate Applicant') was set up in the form of a Special Purpose ...

Demand Notice Sent To Wrong Address Invalidates Insolvency Petition: NCLT Hyderabad

The National Company Law Tribunal Hyderabad Bench of Shri. Rajeev Bhardwaj (Judicial Member) and Shri Sanjay Puri (Technical Member) dismissed a petition filed under Section 9 of the Insolvency & Bankruptcy code (“the Code”), holding that if demand notice u/s 8 of the code is not sent to the correct address, it does not meet the mandatory requirements of law. Background Facts: M/s Anurada Chemicals (“Operational Creditor”) is a chemical manufacturing company primarily engaged in...

Receiver Of Goods Who Has Made Advance Payments Is Also An Operational Creditor: NCLT Chandigarh

The National Company Law Tribunal (NCLT), Chandigarh bench of Shri Harnam Singh Thakur (Judicial Member) and Shri Ashish Verma (Technical Member), held that the receiver of goods who has made advance payments for the goods purchased is also an Operational Creditor. Background Facts: Kiranakart Technologies Pvt. Ltd. (“Operational Creditor”) is engaged in the business of trading of consumer goods on a B2B (Business to Business) basis and is also known by its brand name “Zepto.” On...

Insolvency Proceedings Can't Be Initiated By Operational Creditor When Complaints Regarding Defects Remain Unresolved: NCLT Delhi

The National Company Law Tribunal (NCLT), New Delhi bench of Shri Manni Sankariah Shanmuga Sundaram (Judicial Member) and Dr. Sanjeev Ranjan (Technical Member), held that an Operational Creditor can't initiate insolvency proceedings against the Corporate Debtor for non-payment, when complaints regarding defects in products remain unresolved. Background Facts: Schneider Electric India Pvt. Ltd. (“Operational Creditor”) is a prominent player in the Indian energy management market,...

Order Of DRT Setting Aside NPA Classification Does Not Negate Existence Of Financial Debt Or Occurrence Of Default: NCLT Delhi

The National Company Law Tribunal (NCLT), New Delhi bench of Shri Manni Sankariah Shanmuga Sundaram (Judicial Member) and Dr. Sanjeev Ranjan (Technical Member), held that an order of Debt Recovery Tribunal (DRT) setting aside NPA classification does not negate existence of financial debt or occurrence of default, which are the two primary factors for admitting a Section 7 petition under the Insolvency & Bankruptcy Code (“the code”) . Background Facts: The Applicant, M/S Encore ...