July 11, 2021
Summaries of the noteworthy orders passed by the various NCLT benches in IBC matters ~ By Vinisha Jain, Sujay Agrawal & Sandali Sharma
Reliefs — Can and Cannot Be Given: Bhupendra Singh Rajput RP of Alps Pharmaceuticals Pvt. Ltd. v. Jayesh Kanaiyalal Shukla & Ors.
The RP of the CD (Alps Pharmaceuticals Pvt. Ltd.) filed an application before the AA under Section 30(6) of the Code, for approval of the resolution plan. The plan of the RA (Rajendrakumar Joshi & Civic Services Holding Pvt. Ltd.) had been approved by the CoC with a 100% majority.
On perusal, the resolution plan was found to follow the legal requirements under the Code. Certain parts of the plan sought for ‘Reliefs and Concessions’, but the particulars of these have not been disclosed in the order. The NCLT granted some, and disallowed the others. It was clarified by the NCLT that a RA may apply for any concessions, waivers or exemptions which are permissible to be granted as per the law, subject to the fact that the approval of a resolution plan does not mean that a RA is allowed to automatically abate pending legal proceedings against the CD. Further, reliefs or concessions can only be granted by the competent authority having jurisdiction over the subject-matter.
Resolution of the CoC to take up avoidance proceedings under Section 43 of the Code is not required to be passed in presence of the suspended management, and their absence in the meeting where such resolution was passed does not vitiate the proceedings: Bank of India v. Diamond Power Infrastructure Ltd.
Dismissal of the Petitions in lieu of the Insolvency and Bankruptcy Code (Amendment) Act, 2020: Neha Khanna v. M/s Tybros Infratech Private Limited (06.07.2021); Yatish Agarwal and Another v. Pushpanjali Constructions Private Limited (07.07.2021).
In the cases above, the petitions were filed by the FCs ‘Neha Khanna’ and ‘Yatish Agarwal and Another’ against the CDs ‘M/s Tybros Infratech Private Limited’ and ‘M/s Pushpanjali Constructions Private Limited’ respectively, under Section 7 of the Code (in the capacity of home buyers) for the initiation of the CIRP.
Before venturing into the aspect of existence of debt and default in both the cases, the NCLT addressed the issue of maintainability of the petitions on the basis of the Insolvency and Bankruptcy Code (Amendment) Act, 2020, which mandates that for initiation of CIRP by the homebuyers (the allottees under a real estate project), the application “shall be filed jointly by not less than a hundred of those allottees under the Project or not less than ten per cent of the total number of the allottees under the Project, whichever is less.”
The tribunal referred to the Supreme Court judgment of Manish Kumar v. Union of India, wherein it upheld the constitutionality of the Insolvency and Bankruptcy Code (Amendment) Act, 2020. Therefore, in light of the Amendment, the petitions, as being filed by single homebuyers in both cases, were not maintainable and thus dismissed.
Treatment of Temple Assets found in Possession of the CD in the Absence of a Deed: M/s LML Limited In Liquidation
This application was filed under Section 60(5)(c) of the Code for guidance regarding the donation of temple assets (idols of deities) situated within the premises of the CD, which was under liquidation.
The liquidator, after taking control of the assets, came to know about the articles present inside the temple which were not mentioned in the balance sheet. It was contended that the assets belonged to the deity, and thus could not be treated as a part of the liquidation process.
There was no deed or documents, and no one was assigned to manage the assets, so the liquidator believed he had no right to alienate/transfer them either. There was no other person/entity found that had a vested interest in those assets.
The Bench rectified the doubts by explaining that valuable objects found in the temple are not recorded under the category of “assets” possessed by the CD, however the temple is within the factory premises of the CD and no proof can be furnished to showcase the dissociation of the CD from the temple and its possessions.
The Adjudicating Authority was ultimately of the view that since there was no deed present, the assets found in the temple would be considered mainly within the premises of the CD, and they would rightfully be a part of the liquidation process of his estate. Hence, the application was dismissed.
We talk to Dr. M. S. Sahoo, the IBBI Chairperson and the flag-bearer of the Indian insolvency and restructuring industry, on a variety of issues.July 12, 2021
Case Summary Leo Edibles & Fats Ltd. v. The Tax Recovery Officer (Central), Income Tax Dept., Hyderabad) W.P. No. 8560 of 2018 High Court of Hyderabad, Decided on 26.07.2018 The petitioner purchased an immoveable property from the liquidation of VNR Infrastructures Limited under the Insolvency and Bankruptcy Code 2016 (‘IBC’). However, the registering authority refused […]March 3, 2022
Case Summary Sree Metaliks Limited & Anr. v. Union of India and Anr. W.P. 7144 (W) OF 2017, High Court of Calcutta, Decided on 07.04.2017 This petition challenged the constitutionality of Section 7 of the Insolvency and Bankruptcy Code, 2016 (‘IBC’) and the related rules, on the ground that Section 7 does not afford […]March 3, 2022
In the matter of Om Boseco Rail Products Ltd. (Kolkata Bench (20.05.2020)) Facts In this case, an application under Section 9 of the Code was filed against the CD for an alleged default of operational debt to the tune of Rs. 90,00,919.10 (Rupees Ninety Lakh Nine Hundred Nineteen and ten paise only). The CD contended […]December 22, 2021
The IBBI has recently released the Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) (Second) Guidelines, 2021 (‘Guidelines’). These Guidelines shall be effective from January 1, 2022 and shall supersede the Guidelines [Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustee (Recommendation) Guidelines, […]December 3, 2021
Abbreviations Used Code – Insolvency and Bankruptcy Code, 2016 CIRP – Corporate Insolvency Resolution Process AA – Adjudicating Authority (NCLT) CD – Corporate Debtor FC – Financial Creditor OC – Operational Creditor CoC – Committee of Creditors IRP – Interim Resolution Professional RP – Resolution Professional RA – Resolution Applicant NEW DELHI BENCH-III AA’s power […]September 29, 2021