Speculative Investment Without Commercial Effect Of Borrowing Not A 'Financial Debt': NCLT New Delhi

The National Company Law Tribunal (NCLT), New Delhi Bench-III, comprising Bachu Venkat Balaram Das (Judicial Member) and Shri Atul Chaturvedi (Technical Member) have dismissed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, filed by M.K. Jain and family (Financial Creditors) against Krrish Realtech Pvt. Ltd. (Corporate Debtor) for default of Rs. 12.3 crore. The Tribunal held that the Applicant was a speculative investor and could not claim status and...

Submission Of Default Record Not Compulsory For Initiating CIRP: NCLT Mumbai

The National Company Law Tribunal (NCLT), Mumbai, consisting of Shri Sameer Kakar (Member - Technical) and Shri Nilesh Sharma (Member - Judicial), passed an order and admitted the Corporate Debtor into the CIRP under section 9 of the IBC. The tribunal addressed the issue of mandatory submission of the record of default from an information utility under Regulation 20(1A) of the IBBI (Information Utilities) Regulations, 2017. The bench held that furnishing the record of the default is not...

Petition Filed U/S 9 Of IBC Based On Arbitral Award Cannot Be Entertained After 3 Yrs From Date Of Award: NCLT Mumbai

The National Company Law Tribunal (NCLT) Mumbai bench of Shri K. R. Saji Kumar (Judicial Member) and Shri Sanjiv Dutt (Technical Member) has held that an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (Code), based on an Arbitral Award passed in favor of the Operational Creditor, cannot be admitted after three years from the date of the Award, as per Article 137 of the Limitation Act, 1963 (Limitation Act) read with Section 238A of the Code. Brief Facts: ...

Third Parties Who Sold Land To Corporate Debtor Cannot Be Held Liable U/S 66 Of IBC: NCLT New Delhi

The National Company Law Tribunal (NCLT), New Delhi bench of Justice Ashok Kumar Bhardwaj (Judicial Member) and Anil Raj Chellan (Technical Member) has held that third parties who sold land to the Corporate Debtor cannot be said to fall within the ambit of expression “any persons who were knowingly parties to the carrying on the business of the Corporate Debtor” as used in Section 66 of the Insolvency and Bankruptcy Code, 2016 (“Code”). It observed that an application under the Section may...

Accepting OTS Payments While Simultaneously Pursuing CIRP Proceedings Is An Attempt To Use IBC For Debt Recovery: NCLT Mumbai

The National Company Law Tribunal (NCLT), Mumbai bench comprising Ms. Reeta Kohli, Member (Judicial) and Ms. Madhu Sinha, Hon'ble Member (Technical) has held that the conduct of the Financial Creditor in accepting substantial 'one-time settlement' (OTS) payments while simultaneously pursuing Corporate Insolvency Resolution Process (“CIRP”) proceedings represents an attempt to use the Insolvency and Bankruptcy Code, 2016 (“Code”) as a 'recovery mechanism', which goes against the very...

Threshold Limit For Initiating Insolvency Process Against Personal Guarantors Shall Also Be ₹1 Crore: NCLT Chennai

The National Company Law Tribunal (NCLT) Chennai bench of Shri. Sanjiv Jain (Judicial Member) Shri. Venkataraman Subramaniam (Technical Member) has held that the threshold limit for initiating the Personal Insolvency Resolution Process (PIRP) under Sections 94 or 95 of the Insolvency and Bankruptcy Code, 2016 (Code), shall be the same as that for a Corporate Debtor under Section 4 of the Code, i.e., ₹1 crore. Brief Facts: Mr. Keerthan Kumar Upadhya (Applicant) has filed this ...

Payment Received In Advance By Corporate Debtor For Future Supply Of Goods Is Considered Operational Debt Under IBC: NCLT Mumbai

The National Company Law Tribunal (NCLT) Mumbai bench of Justice V. G. Bisht (Retd.) (Judicial Member) and Sh. Prabhat Kumar (Technical Member) has held that The payment received in advance by the Corporate Debtor for the future supply of goods constitutes an operational debt. An application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (the Code) can be admitted if it exceeds the threshold limit prescribed under Section 4 of the Code. Brief Facts: Armaco Infralinks...

Liquidator Must Not Restrict Sale Of Corporate Debtor's Assets Through Private Sale To Single Buyer, Must Strategise To Attract Multiple Buyers: NCLT Mumbai

The National Company Law Tribunal (NCLT) Mumbai bench of Shri Anil Raj Chellan (Judicial Member) and Shri K. R. Saji Kumar (Technical Member) while disallowing the Liquidator's application for the private sale of the Corporate Debtor's assets, it was held that the Liquidator must not restrict the private sale to a single buyer but should strategize to attract the maximum number of buyers to maximize realization from the asset sale. Brief Facts: The Corporate Debtor was admitted to...

Corporate Debtor Not Barred From Raising Pre-Existing Dispute Even When No Reply Was Given To Demand Notice Within 10 Days U/S 8 Of IBC: NCLT Mumbai

The National Company Law Tribunal (NCLT) Mumbai bench of Hon'ble Shri K. R. Saji Kumar (Judicial Member) and Hon'ble Shri Sanjiv Dutt (Technical Member) has held that failure to respond to a demand notice within 10 days under Section 8 of the Insolvency and Bankruptcy Code, 2016 (the Code) does not bar the Corporate Debtor from asserting the existence of a pre-existing dispute especially when such dispute was raised before the issuance of the demand notice. Brief Facts: The default...

Imposition Of Moratorium Bars Recovery Of Pre-CIRP Tax Dues During CIRP: NCLT Hyderabad

The National Company Law Tribunal (NCLT), Hyderabad Bench-I, consisting of Dr. Venkata Ramakrishna Badrinath (Member - Judicial) and Shri Charan Singh (Member - Technical), disposed of an application filed by Resolution Professional (RP) against the Commissioner, Greater Hyderabad Municipal Corporation (GHMC), and held that once the CIRP has commenced, proceedings for property tax arrears cannot be initiated against the Corporate Debtor. The tribunal also emphasized the overriding effect...

Petition U/S 7 Of IBC Against Corporate Guarantor Cannot Be Admitted Unless Valid Delivery Of Guarantee Invocation Notice Is Established: NCLT Mumbai

The National Company Law Tribunal (NCLT) Mumbai bench of Hon'ble Reeta Kohli (Judicial Member) and Hon'ble Madhu Sinha (Technical Member) has held that an insolvency application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (the Code) against the corporate guarantor of the corporate debtor cannot be admitted unless the delivery of the demand-cum-guarantee invocation notice is properly established. Only when the delivery is proven can the default on the part of the corporate...

Any Default Falling Within Section 10-A Period Of IBC Must Be Excluded When Calculating Total Outstanding Debt: NCLT Hyderabad

The National Company Law Tribunal (NCLT), Hyderabad Bench comprising of Sri Rajeev Bhardwaj, Member (Judicial) and Sri Sanjay Puri, Member (Technical) dismissed Section 9 petition filed by the Operational Creditor (Noveltech Feeds Private Limited) stating that the default amount falls within the Section 10-A period and there is presence of non-compliance of Rule 5 which is fatal to the initiation of insolvency proceedings. Brief Facts The case involves Noveltech Feeds Private...