IBC Forms- Insolvency and Bankruptcy Code 2016 – Forms, Demand Notices, Returns

IBC Forms- Insolvency and Bankruptcy Code 2016 – Forms, Demand Notices, Returns

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The implementation of the 2016 Insolvency and Bankruptcy Code (“IBC”) in India has provided a fundamental change in attitude to addressing the issue of rising non-performing assets (NPA) and assisting the financial sector with early detection, rehabilitation and restructuring steps of stressed assets.

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Various Kind of Demand Notice Forms issued under the IBC Code, Insolvency is that state when one is unable to pay the debt. Demand Notice to recover the debt is sent under of IBC Code, 2016 by the creditor/ Employee/ Workman or any other person to the corporate debtor. IBC Code also prescribes the procedure to file an insolvency proceeding before NCLT.

Insolvency Resolution Process for Corporate Person- Time Limits under IBC

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Key point Under the IBC

As per IBC sections 7 and 9, it is not mandatory to allow the corporate debtor the chance to be heard until IBC’s application is accepted. And as set out in section 14, once the IBC application is accepted, the management team goes into the hands of IRP proposed by such an applicant. Therefore, there are high chances that even a small default could cause a situation where the business goes to hands. It is because, on the one hand, creditors recover debts from the bankrupt company while, on the other, certain creditors use IBC to intimidate and harass the corporate debtor. It is a manipulation of new legislation to place pressure on corporate debtors to recover the fraudulent/falsified claims.

The civil recovery issues take a very long time to determine which is a well-known reality. There is a weak credit control in trade, due to poor recoverability. It has influenced companies, as it also contributes to a high demand for capital investment and leading to greater pressure on profitability.

Insolvency & Bankruptcy Code (IBC) has made a big change, and now an operational creditor can take action under IBC to recover their duties in a very cost-effective manner. Various Forms Specified areas under Insolvency Resolution Process for Corporate Person:

Forms Description Go to
Form A Public Announcements Click here
Form AA Consent to act as Resolution Professional Click here
Form AB Consent to act as an authorized representative Click here
Form B Proof of claim Click here
Form C Submission of a claim by the financial creditor Click here
Form CA Submission of a claim by the financial creditor in a class Click here
Form D Proof of claim by workman or employee Click here
Form E Proof of claim by workman or employee by an authorized representative Click here
Form F Submission of a claim by creditors Click here
Form FA Application for withdrawal of CIRP Click here
Form G Invitation for expression of interest Click here
Form H Compliance certificate Click here
Form 1 Application by financial creditor to initiate CIRP Click here
Form 2 Written communication by proposed IRP Click here
Form 3 Form of Demand Notice demanding payment under IBC code, 2016 Click here
Form 4 Form of Notice with which Invoice demanding payments to be attached Click here
Form 5 Application of Operational Creditor to initiate CIRP Click here
Form 6 Application by Corporate Applicant to start CIRP Click here
Due dates Under the IBC 

Fast Insolvency Resolution Process for Corporate Person

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www.carajput.com; IBBI Section55 to 58The aim of the Fast Insolvency Resolution Process for Corporate Person is to speed up the CIRP of start-ups and small businesses with less complexity and the time taken to complete an insolvency resolution to nearly half as opposed to the standard Code procedure. The Fast Insolvency Resolution Process for Corporate Person must be done within a period of ninety (90) days, as compared in other situations to one-eighty (180) days. The adjudicating authority may, however, extend the duration of ninety ( 90 ) days by a further period of up to forty-five (45) days to complete the proceedings. However, this extension can only be given once and can only be applied for if COC agrees that in a resolution adopted and approved by a majority of 75% of the voting share

The Regulations and the Fast Track Resolution process apply to the following corporate debtor categories-:

(I) a small enterprise as described in the 2013 Companies Act;

(ii) a start-up (other than a partnership) as set out above;

(iii) an unlisted corporation with total assets not exceeding one crore, as stated in the financial statement of the financial year immediately preceding it.

Various Forms Specified areas under Fast Insolvency Resolution Process for Corporate Person :

Forms Description Go to
Form A Public Announcements Click here
Form B Proof of claim Click here
Form C Submission of a claim by the financial creditor Click here
Form D Proof of claim by workman or employee Click here
Form E Proof of claim by workman or employee by an authorised representative Click here
Form F Submission of a claim by creditors Click here

The Laws as a whole provide for the resolution process from the commencement of the corporate debtors’ insolvency resolution until its completion, with the adjudicating authority’s approval of the resolution plan within the specified deadlines, thus guaranteeing the extremely viable of any case under the fast track procedure.

Liquidation Process

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www.carajput.com; IBC

 

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Under the following conditions, the winding-up process is activated under section 33 of the Insolvency and Bankruptcy Code 2016-

  • When no resolution plan is presented by qualified interim resolution as provided from the adjudicating authority at or before the insolvency resolution period expires.
  • If the resolution strategy is not consistent with section 31 as provided by IRP.
  • When a request from the creditor’s committee is issued for the liquidation of the corporate debtor during the corporate insolvency resolution process, the same shall be conveyed to the adjudicating authority by the interim resolution professional.
  • If the corporate debtor refuses to obey the resolution plan authorized by the adjudicating authority and the individual or creditor impacted by this files an application for the liquidation of the corporate debtor and the adjudicating authority considers the corporate debtor responsible.

When the mechanism of liquidation is begun in compliance with the above requirements, the moratorium will begin. During the suspension, a public statement shall be made on the liquidation of the corporate debtor.

As per section 34, a liquidator is named and the fee to be charged to him in respect of the trial is determined. The liquidator fee is part of liquidation assets proceeds. The Professional Counsel also serves as a liquidator until NCLT replaces him.

Liquidation trust shall be established in compliance with section 36 of the Code of Insolvency and Bankruptcy. Each section is the cornerstone of the corporate liquidation process as it determines which corporate debtor’s assets will form part of the liquidation estate, how the assets will be allocated by the liquidator, and who will retain the estate as a fiduciary for all creditors’ benefit.

Various Forms Specified areas under Liquidation Process :

Forms Description Go to
Form A Performa for Reporting consultations with Stakeholders Click here
Form B Public Announcements Click here
Form C Submission of a claim by the financial creditor Click here
Form D Proof of claim by workman or employee Click here
Form E Proof of claim by workman or employee by an authorized representative Click here
Form F Submission of a claim by creditors Click here
Schedule 111 Form for cashbook, general ledger, bank ledger, register of assets, securities, and investment registers, tenants ledger, etc. Click here

The creditors’ claims are then assessed. There are different parts assisting in this process. Section 38 specifies how financial and operational creditors’ claims should be combined, section 39 specifies how claims should be checked, and section 40 describes the procedure for approving and rejecting claims, and under section 42 of IBC describe how the applications against the liquidator decision shall be processed.

Voluntary Liquidation Process

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www.carajput.com; IBC

The company isn’t always flourishing. This may face other difficulties, such as liquidity crisis and economic downturn, as a result of which the corporate debtor delays meeting its creditor’s responsibility.

If the corporate debtor has been unable to discharge his debts and does not have adequate resources such as available funds, then the corporate debtor will voluntarily file the insolvency petition for the Corporate Insolvency Resolution Process and NCLT must accept it if the petition has not been submitted to defraud the creditors.

Forms Description Go to
Form A Public Announcements Click here
Form B Proof of claim Click here
Form C Submission of a claim by the financial creditor Click here
Form D Proof of claim by workman or employee Click here
Form E Proof of claim by workman or employee by an authorized representative Click here
Form F Submission of a claim by creditors Click here
Schedule 11 Form for cashbook, general ledger, bank ledger, register of assets, securities, and investment registers, tenants ledger, etc. Click here

Connect to us for expert legal consultation for more effective legal aid or knowledge about the value of claim notice under the insolvency and bankruptcy code.

The insolvency law requires a financial creditor and operational creditor to file insolvency proceedings against a defaulting corporation after determining that there is a dispute between the parties. The first move is to give the corporate defaulter a claim notice (Form 3 of IBC) to recover operating debt under insolvency law. To creditors that are not financial creditors and operational creditors, to example: homebuyers, submission of a “Form F” is necessary to file a claim.

Depending on the facts and details of the operating debt to be recovered, a good corporate lawyer will draft a notice of claim on your behalf.

Want Legal Assistance? Consult with Rajput Jain & Associates most accomplished lawyers anywhere in India!

How does the Role of Resolution Professional help under IBC

Fresh IBC has been suspended for one year. As per the declaration of FM.

Just contact us at info@carajput.com or call us at 9555-555-480 now.

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

Penalties imposed Rs 34.22 on RP by IBBI on breach of moratorium condition

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www.carajput.com; IBBIPenalties imposed Rs 34.22 on RP by IBBI on breach of moratorium condition

IBBI assigns Rs 34.22 a lakh penalty for insolvency professional on breach of the condition of moratorium by enabling the movement of funds of the corporate debtor during the CIRP

Insolvency regulator IBBI’s Disciplinary Committee (DC) has levied a fine of Rs 34.22 for insolvency practitioners, Mohan Lal Jain for violation of some provisions of the Insolvency and Bankruptcy Code (IBC).

The penalty imposed is equivalent to 25% of the service charge that Mack Soft-Tech Pvt Ltd obtained as a Professional Resolution (RP) in the Corporate Insolvency Resolution Process (CIRP).

The violation connected to the RP going to continue to make payments to HDFC after obtaining the approval of the members of the Creditors’ Committee (CoC) during the CIRP, which is in violation of the moratorium requirements found in the IBC and inflicted by the Adjudication Authority on 11 August 2017.

The main point which had to be discussed in the current context was whether or not the payout of EMIs to a financial creditor (in this case HDFC) made after the CIRP moratorium was in breach of IBC.

In its submissions, RP — Mohan Lal Jain — contested that the decision to continue paying regular EMIs on the lease invoices of Corporate Debtor in the ordinary course of business had been taken by CoC with a 100% voting share before taking over as RP and was part of the business decision of the CoC taken in the interest of the corporate debtor. It was also submitted by the RP that payment of EMIs was a routine business transaction undertaken by the RP to keep the corporate debtor as a cause of importance and thus can not be regarded as a transfer of an asset.

The Disciplinary Committee concluded, nevertheless, that the RP not just to refused to address the concerns of the CoC the prohibition put on the transfer of the properties of the Corporate Debtor during the CIRP under Section 14 of the IBC, but also permitted a consistent violation of the moratorium by allowing the EMIs to be deducted from the cash flow / rental income of the Corporate Debtor. “It demonstrates the casualness and ignorance of RP in fulfilling its role as RP and its misconception of the rules,” the Investigative Committee said.

The Disciplinary Committee noted that Mohan Lal Jain had a casual and negligent approach during the conduct of the CIRP. In the present situation, the RP lost its integrity and agreed to pay EMIs to the financial creditor during the CIRP from the assets of the Corporate Debtor, the Investigative Committee said.

The provisions of the IBC Moratorium provide for the restriction of the institution of a suit by that are against the corporate debtor, the transfer, alienation or disposal of any of the assets or legal rights or interest of the corporate debtor, the foreclosure, recovery or enforcement of any security interest of the corporate debtor in respect of its property. The moratorium period is similar to the period of insolvency resolution.

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

GSTN provided guidance on the GST Registration facility available for IRP

The facility for the registration of IRPs made available on the GST Portal

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www.carajput.com; GST Registration

  • Insolvency Resolution Professionals / Resolution Professionals (IRPs / RPs), named to conduct corporate insolvency resolution proceedings for corporate debtors, in the form of notice. No 11/2020-CT of 21 March 2020 may apply for a new registration on the GST Portal, on behalf of the Corporate Debtors, in each of the States or Union Territories, on the PAN and CIN of the Corporate Debtor, where the Corporate Debtor was registered earlier, within thirty days of their appointment as IRP / RP.
  • The Registration Explanation should be picked as Corporate Debtor undergoing the Corporate Insolvency Resolution Process with IRP/RP ” from the drop-down menu.
  • The day of the commencement of operations for IRP / RPs will be the day of their appointment. Their compliance duties may also fall into force from the date of their appointment.
  • The person named as IRP / RP shall be the Primary Approved Signator of the newly registered Company.
  • Information as stated in the original registration of the Corporate Debtors shall be entered in the Main Place of Business / Additional Place of Business.
  • The new form for registration shall have been sent electronically to the GST Website under the IRP / RP DSC.
  • New IRP / RP registration will only be needed once. In the event of a change in IRP / RP, a change of the approved signatory will be called after the original appointment and not the appointment of a different individual needing a new register.
  • In cases where the RP is not the same as the IRP, or in cases where a different IRP / RP is appointed in the middle of the insolvency process, a change in the GST system may be made through a non-core change in the registration form.
  • The adjustment to the Primary Authorized Signatory information on the site can be made either by the authorized signatory of the Company or by the competent court officer (if the former authorized signatory may not exchange the credentials with his successor) at the request of the IRP / RP.

 

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

Overviews of Principles of Avoidable Preferential Transactions: IBC 2016

Elements of Avoidable Preferential Specified Transactions under IBC 2016

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As per the 2016 Insolvency and Bankruptcy Code, Section 43 to 51 deals with avoidable transactions. These transactions are also kept referring to as vulnerable transactions. As per the code, there are three types of avoidable transactions. These are preferential transactions, undervalued transactions, and extortionate credit transactions that the corporate debtor must avoid during the relevant period.

Section 43: Preferential Transaction  

To the advantage of the borrower, a sale of the assets or property of the corporate debtor shall be made on account of the previous financial obligation or other liabilities. Such a move has the effect of placing the borrower in a place of profit rather than the allocation of the properties referred to in section 53

Not considered as preferential transactions

  1. Transfer made in the ordinary course of business of the corporate debtor or the transferee
  2. Any transfer creating a security interest in the property acquired by the corporate debtor to the extent that,
  3. Such security interest secures “new value” and was given at the time of or after the signing of a security agreement that contains a description of such property as a security interest and was used by corporate debtor to acquire such property
  4. Such transfer was registered with an information utility on or before thirty days after the corporate debtor receives possession of such property
  5. Provided that any transfer made in pursuance of the order of a court shall not, preclude such transfer to be deemed as giving of preference by the corporate debtor

New Value: means money or its worth in goods, services, or new credit, or release by the transferee of property previously transferred to such transferee in a transaction that is neither void nor voidable by the liquidator or the resolution professional under this Code, including proceeds of such property, but does not include a financial debt or operational debt substituted for existing financial debt or operational debt.

Relevant Time: it is given to a related party (other than by reason only of being an employee), during the period of two years preceding the insolvency commencement date; or

A preference is given to a person other than a related party during the period of one year preceding the insolvency commencement date.

Section 44: Orders in case of Preferential Transactions

The Adjudicating Authority may on application made by the resolution professional or liquidator, by an order

  1. require any property transferred in connection with the giving of the preference to be vested in the corporate debtor
  2. require any property to be so vested if it represents the application either of the proceeds of sale of property so transferred or of money so transferred;
  3. release or discharge (in whole or in part) of any security interest created by the corporate debtor;
  4. require any person to pay such sums in respect of benefits received by him from the corporate debtor, such sums to the liquidator or the resolution professional, as the Adjudicating Authority may direct;
  5. direct any guarantor, whose financial debts or operational debts owed to any person were released or discharged (in whole or in part) by the giving of the preference, to be under such new or revived financial debts or operational debts to that person as the Adjudicating Authority deems appropriate;
  6. direct for providing security or charge on any property for the discharge of any financial debt or operational debt under the order, and such security or charge to have the same priority as a security or charge released or discharged wholly or in part by the giving of the preference; and
  7. direct for providing the extent to which any person whose property is so vested in the corporate debtor, or on whom financial debts or operational debts are imposed by the order, are to be proved in the liquidation or the corporate insolvency resolution process for financial debts or operational debts which arose from, or were released or discharged wholly or in part by the giving of the preference:

Provided that an order under this section shall not—

  1. affect any interest in property which was acquired from a person other than the corporate debtor or any interest derived from such interest and was acquired in good faith and for value;
  2. require a person, who received a benefit from the preferential transaction in good faith and for value to pay a sum to the liquidator or the resolution professional.

Section 45: Undervalued Transactions

If, as the case may be, the liquidator or the resolution professional finds, after reviewing the transactions of the corporate debtor, that such transactions have been made within the applicable time under section 46 which have been undervalued, he shall make an appeal to the adjudicating authority to declare certain transactions null and void and to reverse the effect of such transactions in compliance with that clause.

A transaction shall be considered undervalued where the corporate debtor

  1. makes a gift to a person; or
  2. enters into a transaction with a person which involves the transfer of one or more assets by the corporate debtor for a consideration the value of which is significantly less than the value of the consideration provided by the corporate debtor,
  3. and such transaction has not taken place in the ordinary course of business of the corporate debtor.

Section 46: Relevant period for avoidable transactions

In an application for avoiding a transaction at undervalue, the liquidator or the resolution professional, as the case may be, shall demonstrate that—

  1. such transaction was made with any person within the period of one year preceding the insolvency commencement date; or
  2. such a transaction was made with a related party within the period of two years preceding the insolvency commencement date.

Section 47: Application by creditor in case of undervalued transactions

Where an undervalued transaction has taken place and the liquidator or resolution professional, as the case may be, has not informed the adjudicator, the borrower, the employee or the spouse of the corporate debtor, as the case may be, the appeal to the adjudicator to render those transactions null and void in compliance with this Clause.

Where the Adjudicating Authority, after examination of the application made under sub-section (1), is satisfied that—

  1. undervalued transactions had occurred; and
  2. the liquidator or the resolution professional, as the case may be, after having sufficient information or opportunity to avail information of such transactions did not report such transaction to the Adjudicating Authority,

It shall pass an order—

  1. restoring the position as it existed before such transactions and reversing the effects thereof in the manner as laid down in section 45 and section 48;
  2. requiring the Board to initiate disciplinary proceedings against the liquidator or the resolution professional as the case may be.

Section 48: Order in case of undervalued transactions

The order of the Adjudicating Authority under sub-section (1) of section 45 may provide for the following:

  1. require any property transferred as part of the transaction, to be vested in the corporate debtor;
  2. release or discharge (in whole or in part) any security interest granted by the corporate debtor;
  3. require any person to pay such sums, in respect of benefits received by such person, to the liquidator or the resolution professional as the case may be, as the Adjudicating Authority may direct; or
  4. require the payment of such consideration for the transaction as may be determined by an independent expert.

Section 49: Transactions defrauding creditors

Where the corporate debtor has entered into an undervalued transaction and the Adjudicating Authority is satisfied that such transaction was deliberately entered into by such corporate debtor—

  1. for keeping assets of the corporate debtor beyond the reach of any person who is entitled to make a claim against the corporate debtor; or
  2. in order to adversely affect the interests of such a person in relation to the claim,
  3. the Adjudicating Authority shall make an order—
  4. restoring the position as it existed before such transaction as if the transaction had not been entered into; and
  5. protecting the interests of persons who are victims of such transactions:

Provided that an order under this section—

  1. shall not affect any interest in property which was acquired from a person other than the corporate debtor and was acquired in good faith, for value and without notice of the relevant circumstances, or affect any interest deriving from such an interest, and
  2. shall not require a person who received a benefit from the transaction in good faith, for value and without notice of the relevant circumstances to pay any sum unless he was a party to the transaction.

Section 50: Extortionate credit transactions

Where a corporate debtor has been a party to an extortionate credit facility involving the acquisition of financial or operational liability for a period of two years before the date of commencement of insolvency, the liquidator or the resolution professional may, as the case may be, make an appeal to the Adjudicating Authority to prevent such an agreement if the terms of that transaction are met.

Section 51: Orders of Adjudicating Authority in respect of extortionate credit transactions

Where the Adjudicating Authority after examining the application made under sub-section (1) of section 50 is satisfied that the terms of a credit transaction required exorbitant payments to be made by the corporate debtor, it shall, by an order—

  1. restore the position as it existed prior to such transaction;
  2. set aside the whole or part of the debt created on account of the extortionate credit transaction;
  3. modify the terms of the transaction;
  4. require any person who is, or was, a party to the transaction to repay any amount received by such person; or
  5. require any security interest that was created as part of the extortionate credit transaction to be relinquished in favor of the liquidator or the resolution professional, as the case may be.

Therefore, the rules for the prohibition of transactions ensure that transactions that have no other business intent and which have been conducted solely to the benefit of certain creditors or to obstruct the insolvency or liquidation process are put aside. The laws aim to remedy the condition when a certain transfer of assets is made merely to hold the property away from the pool of assets to be shared by creditors. However, the principles of deterrence must be strictly followed to ensure that legal activities conducted in the usual course of business are not overturned.

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

Important Updates on the reduction compliance obligation under Atmanirbhar Scheme:

Important Relevant updates on the reduction of compliance obligation under the Atmanirbhar Scheme:

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www.carajput.com; Sitharaman

TODAY ‘S FIFTH AND LAST TRANCH OF ANNOUNCEMENTS FOCUS ON 8 SECTORS:

1. MGNREGA Scheme 

Total budget was Rs 61,000 crores

• The extra Rs 40,000 crores allotted

2. HEALTH’s

• Setting up the public system

• Block all districts to avoid infectious diseases

• Public health laboratories to be set up at block level in all districts;

3. EDUCATION-driven technology

• PM e-Vidya multi-mode control system

• One-nation interactive school under DIKSHA for school education

• One-year Television channel for each class;

• Extensive use of radios

• Special e-content for children of Divyang

 Top 100 universities must ultimately be allowed to start online courses by 30 May 2020.

 4.  Significant support to distressed firms: Fresh IBC has been suspended for one year. As per the declaration of FM.

A.    IBC related – debts related to COVID 19 are out of IBC default

B.    No further insolvency lawsuits can be launched for up to a year. i.e No fresh insolvency case will be initiated for up to a year

C.   Minimum limit of IBC would be Rs. 1 Cr. i.e Total insolvency requirement lifted from Rs 1 lakh to Rs 1 crore

D.   Decriminalised all the sections. Few Non Compoundable offenses would become compoundable offenses.

E.    Compounding by ROC

F.    Direct listing in foreign destinations

G.   NCD listing would not be treated as listed companies for the purpose of Companiesct

H.   Covid-related loans should be exempt from default under IBC

I.      For MSMEs, a special insolvency framework will be notified

Fresh IBC proceedings suspended for a year; debts related to Covid ...

 5. State seeks to decriminalize losses under the Companies Act

• Bulk of compound crimes parts to be transferred to the Internal Adjudication System (IAM) and improved RD forces for compounding.

• 7 compounding crimes dropped entirely and 5 to be dealt with in an alternate system.

 6. Simplify of doing business for companies

• Clear listing of shares by Indian listed corporations within international jurisdiction. Pvt firms that issue non-convertible bonds (NCDs) on stock exchanges not to be considered as public entities.

All industries are now open to private parties

7. Fresh Public Sector Business Strategy

• The Pvt sector will be able to invest in all markets, while public sector companies will continue to play a significant role.

• a new policy that will categorize strategic sectors and others.

• The list of strategic sectors requiring the presence of PSEs in the public interest shall be notified.

A list of strategic sectors needing the participation of PSEs in the public interest will be identified.

• There will be at least one PSE in these strategic sectors, but the pvt sector will also be authorized.

• The PSEs should be privatized in other industries.

• To reduce unnecessary operating expenses, the number of firms in key markets will usually be just three or four, while others will be privatized / mixed / brought under holding companies.

 8. Policy management and services

• The Center has agreed to raise the State Borowing Limit from 3% to 5% for FY21. This will provide extra Rs 4.28 lakh crore capital to states.

A.   Part of the loan would be related to specific reforms. The relation between the reforms will be in four areas:

1. One Nation One Ration Card,

2. Ease of Doing Business,

3. Power distribution,

4. Urban local body revenues.

 B.   The Department of Spending should be told of a particular scheme

• Unconditional 0.50 percent rise

• 1% in 4 tranches of 0.25% for each tranche linked to specifically specified, tangible and feasible policy actions;

• 0.5 per cent of targets was reached in at least three of the four improvement regions.

Post by Rajput Jain & Associates

 

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

Crux-of-Case-law Insolvency and bankruptcy judgements of the Supreme High Court, NCLAT and the NCLT Court

Crux-of-Topic Wise case-laws Insolvency and bankruptcy law rulings of the  supreme court high court, NCLAT, and NCLT Court

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ARBITRATION CLAUSE

Hotel Guadvan (P.) Ltd. v. Alchemist Asset Reconstruction Co. Ltd. [2018] (NCL-AT)

• When moratorium came into effect, in view of section 14, no arbitration proceeding could have taken place [Sec. 14]• In order of the supreme court, instant appeals were to be dismissed with cost.


Achenbach Buschhutten GmbH & Co. v. Arcotech Ltd. [2017] (NCL-AT)

The mere existence of an arbitration clause in relevant agreement would not lead to the rejection of an application to initiate the insolvency process [Sec. 9] where bank which was maintaining accounts of the operational creditor, gave certificate confirming that there was no payment of the unpaid operational debt by Corporate Debtor, but said the bank was not a financial institution as defined in section 3(14), an application under section 9 was not maintainable [Sec. 9]

Alchemist Asset Reconstruction Company Ltd.  V. Hotel Gaudavan (P.) Ltd. [2017] 88 202/[2018] 145 SCL 428 (SC)

• Arbitration proceedings cannot be initiated after the imposition of moratorium alter section 14(l)(3i) has come into effect; it will be non-est in law and cannot be allowed to continue [Sec. 14] 

Anapurna Infrastructure (P) Ltd. V. SORIL Infra Resources Ltd. [2018] (NCL-AT)

• As apparent from Form 5 of Insolvency and Bankruptcy (application to adjudicating authority)rules,2016, for purpose of insolvency and bankruptcy code, an arbitral award has been held to be a document of debt [sec 3(11)].• For purpose of Code, an Arbitral Award has been held to be a document of debt and non-payment of awarded amount to default in payment of a debt [sec 3 (12)].• From clause (a.) of sub-section (2) of section 8, it is clear that pendency of arbitration proceedings has been termed to be an existence of a dispute and not the pendency of an application under section 34 or section 37 of the arbitration act form 5 of the insolvency and bankruptcy (application to adjudicating authority) rules,2016 is the form required to be filled to apply under section 9 wherein the order passed by arbitral panel has been cited as one of the document, record, and evidence of default.

Anapurna Infrastructure (P) Ltd. V. SORIL Infra Resources Ltd. [2018] (NCLT-New Delhi)

• During the pendency of arbitration proceedings operational creditor could not initiate insolvency process against corporate debtor [sec 9]• Held that, during the pendency of arbitration of proceedings operational creditor could not initiate insolvency process against the corporate debtor. 

DISPUTE

K. V Naga Prasad v. LancoInfratech Ltd. [2018] (NCLT-Hyd)

• Where dues claimed by petitioner, un ex-employee of respondent-company, were totally m dispute as petitioner ‘s claim was not only rejected by company hut it also filed a statement showing that petitioner himself had to pay a company, a petition filed by petitioner for initiating corporate insolvency resolution process against company nus to he rejected [Sec. 9]

Kirusa Software (P.) Ltd. v. Mobilox Innovations (P.) Ltd. [2017] (NCL-AT)

• Where Adjudicating Authority rejected an application filed by ape rational creditor to initiate corporate insolvency resolution process without examining issues, i.e., whether dispute raised by the corporate debtor was qualified as a dispute or whether notice of dispute fulfilled conditions stipulated in section 8, same was to be remitted to adjudicating authority [Sec. 9]

MCL Global Steel (P.) Ltd. v. Essar Projects India Ltd. [2018] (NCL-AT)

• Adjudicating Authority is bound to issue a limited notice to corporate debtor before admitting a case for the ascertainment of existence of default based on material submitted by financial creditor to find out whether the application is complete and/or there is any other defect required to be removed [Sec. 7] • Where in response to demand notice corporate debtor raised a dispute regarding quality of construction work and non-compliance of work within time frame, application to initiate insolvency resolution process was to be rejected. [Sec. 8]• Where impugned order for initiating corporate insolvency resolution process was passed without prior notice to the corporate debtor and Operational creditor had not disputed same but submitted that no other notice was to be provided to the corporate debtor except for service of application at the time of filing, the principle of rules o/ natural justice was violated and, thus, impugned order by AdjudicatingAuthority was to be rejected [Sec. 9]

 

Meyer Apparel Ltd. v. Surbhi Body Products (P.) Ltd. [2018] (NCL-AT)

• Where corporate debtor had raised dispute relating to the quality of goods which culminated into pendency of Company Petition before High Court, such dispute fell within the ambit of the expression ‘dispute as defined under sub-section (6) of section 5 and also within the ambit of expression existence of a dispute, if any, us mentioned under sub-section (2) of section 8 [Sec. 5(6)]• Once in a petition under section 7 or 9 corporate resolution process is initiated, the Adjudicating Authority has no jurisdiction to initiate another corporate resolution process against the same corporate debtor [Sec. 9]

 

Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [2017] (SC)

• Claim of the corporate debtor that there existed dispute in relation to breach of Non-Disclosure Agreement was sufficient to refuse entertainment of insolvency application by the operational creditor; Appellate Tribunal Was wholly incorrect in characterizing defense as vague, got-up and motivated to evade liability [Sec. 5(6)]• Adjudicating authority, when examining an application under section 9 will have to determine (a) whether there is an operational debt  exceeding 1 lac as defined in section 4 , (b) whether documentary evidence furnished with applications shows that aforesaid debt is due and payable and has not yet been paid and (c) whether there is existence of a dispute between parties or record of pendency of a suit or arbitration proceedings filed before receipt of demand notice operational debt in relation to such dispute ; if anyone of aforesaid conditions is lacking , application would have to be rejected (sec 9)• One of principal reasons why Code was enacted was because liquidation proceedings went on interminably, thereby damaging interest of all stakeholders, except a recalcitrant management which would continue to hold on to company without paying its debts; both Tribunal and Appellate Tribunal will do well to keep in mind this principle objective sought to be achieved by Code and will strictly adhere to time frame within which they are to decide matters under Code [See. 9]

Philips India Ltd. v. Goodwill Hospital and Research Centre Ltd.[2017](NCL-AT)

• Where corporate debtor much prior to issuance of notice under section 8 raised a dispute relating to the quality of service/maintenance pursuant to notice under sections 433(e) and 434(1)(a) of Companies Act, 1956, there was the existence of dispute about the claim of debt and, therefore, an application under section 9 for initiation of corporate insolvency resolution process against the respondent-corporate debtor was to be rejected [Sec. 5(6)]

One Coat Piaster v. Ambience (P.) Ltd. [2017] (NCLT – New Delhi)

• were in response to demand notice under section 8, corporate debtor raised a dispute regarding the defective and poor quality of work provided by operational creditor, an application under section 9 for initiation of corporate insolvency resolution process against the corporate debtor was to be rejected[Sec.5(6)]

Sandeep Reddy v. Jaycon Infrastructure Ltd. [2017] (NCL-AT)

• Where prior to issuance of notice corporate debtor had raised a dispute that operational creditor had failed and ignored to complete works under agreement by the scheduled date and executed only a part of work and willfully abandoned work after some time, admission of the application under section 9 against the corporate debtor was to be set aside [sec. 5(6)]

Softwareone India (P.) Ltd. v. Emkor Solutions Ltd. [2018] (NCLT- New Delhi)

• Where corporate debtor furnished sufficient documents in support of the existence of dispute regarding the quality of service, an application filed under section 9 was to be rejected [sec 5(6)] 

 

Uttam Galva Steels Ltd. v.  DF Deutsche Forfait Ag [2017] (NCLT-New Delhi)

• Where operational creditor’s claim was disputed by debtor much prior to a notice issued under insolvency resolution process, there was an existence of a dispute and hence no application to initiate insolvency process could be filed [sec 5(6)]• Where lawyer of operational creditor company was neither authorized by its Board of Directors nor did he hold any position with relation to said company, demand notice issued by him could not be treated as notice issued under insolvency resolution process [sec 8]• Joint application to initiate insolvency resolution process by more than one operational creditor is not maintainable [sec 9]• Along with application to initiate insolvency resolution process it is mandatory for an operational creditor to file a certificate of recognized financial institution that there was no payment of unpaid operational debt by corporate debtor [sec 9]

V.R. Polyfab (P.) Ltd. v. Sadbhav Enterprise (P.) Ltd. [2018] (NCLT-Ahd.)

• Where applicant financial creditor provided unsecured loan to respondent company, fact corporate debtor deducted tax on interest on loan amount, would show that there was an outstanding debt/ financial debt due from corporate debtor to financial creditor, even if it was assumed that respondent was entitled for certain amount from applicant, it could only be treated as set off or counter claim, and it could not be a dispute relating to financial debt due to applicant from respondent [sec 5(8)]

MORATORIUM

Alpha & Omega Diagnostics (India) Ltd. V. Asset Reconstruction Company of India Ltd. [2018] (NCL-AT)

• Adjudicating Authority was justified in admitting application under section 10 subject to exception that property not owned by corporate debtor would not fall within ambit of moratorium as per section14 and, consequently, moratorium would include assets of corporate debtor only (Sec. 10)NOT any assets movable or immovable of third party

Schweitzer systemtek India (P.) Ltd. V. Phoenix ARC (P.) Ltd. [2018] (NCL-AT)

• Moratorium in case of corporate debtor had no application on properties beyond ownership of corporate debtor and order of adjudicating authority attaching moveable and immovable property of guarantor was justified [sec 14]• Where corporate insolvency resolution process or liquidation proceedings against principal corporate debtor is pending before Adjudicating authority, application for initiation of resolution process against personal guarantor is required to be filed before very same Bench of Adjudicating authority [sec 60]

ICICI Bank Ltd. v. ABG Shipyard Ltd. [2018] 91

89 (NCLT-Ahd.)/ ABG Shipyard Ltd. v. ICICI Bank Ltd. [2017] 88 196 / [2018] 145 SCL 430 (NCLT-Ahd.)/ Nitin Hasmukhal Parikh v. Madhya Gujarat Vij Company Ltd. [2018] 90398/146 SCL 412 (NCLT-Ahd.)

• section 14 of bankruptcy code must prevail over section 56 of electricity act ,2003, since electricity is an essential goods with reference to corporate debtor, in view section 14(2) electricity company was not entitled to disconnect power supply to corporate debtor during moratorium period for non-payment of electric bill [sec 14]

Financial Creditor

PEC Ltd. r. Sree Ramakrishna Alloys Ltd. [2018] (NCL – AT)

• Where corporate debtor had borrowed money from appellant against payment of interest, appellant came within meaning of ‘Financial creditor and was eligible to file an application under section 7 there being a debt and default on part of corporate debtor [Sec. 5(20)] • Where an application was filed under section 7 and Adjudicating Authority concluded that applicant was not a ‘Financial creditor’, m such case Adjudicating Authority had jurisdiction to reject application filed under section 7, bat said Authority could not treat application filed under section 7 as an application under section 9 nor could treat said applicant as an ‘Operational creditor’, in absence of any claim made under section [Sec. 7]

 

PEC Ltd. v. Sri Ramakrishna Alloys Ltd. [2018] (NCL-AT)

• As per Rule 7 of Adjudicating Authority Rules, 2016, an application filed under section 7 or 9 could be withdrawn prior to admission of case, which means that after admission of an application, an operational creditor’s ‘financial creditor’ cannot withdraw application [Sec.7] • Held that, if the adjudicating authority had granted some time to the corporate debtor before admission of the application, the impugned order was not to be interfered with.

Agroh Infrastructure Developers (P.)  Ltd.  V.  Narmada construction (Indore) (P.) Ltd. [2018] (NCL-AT)

• Where NCLT admitted application under section 9 without giving any notice to corporate debtor, order admitting application being passed in violation of natural justice was to be set aside [Sec. 9]• Held that impugned order was passed in violation of principles of natural justice and hence the impugned order was to be set aside and the liberty should be given to the financial creditor to withdraw application filed under section 9

Chitra Sharma v. Union of India [2017] 85/144 SCL 1 (SC)

• Where MCLT admitted CIRP application filed by financial creditor bank IDBI against corporate debtor infrastructure company JIL for non-payment of debt and Supreme Court granted stay on order of NCLT, on plea of financial creditor bank-IDBI in instant petition, Supreme Court restored management of company JIL to IRP to secure management of company JIL by IRP who would make all necessary provisions in Interim Resolution Plan to protect interest of consumer-home buyers; further, holding company of JIL, namely, company JAL, was directed to deposit Rs.2000crore with Court [Sec. 17]•supreme court allowed the petition filed by the home buyer and stayed order passed by NCLT whereby it admitted application filed by a financial creditor against the corporate debtor – developer [sec 7]•where NCLT admitted CIRP application filed by financial creditor bank IDBI against corporate debtor infrastructure company JIL for non-payment of debt, supreme court allowed the petition filed by consumer home buyer and stayed order passed by NCLT [sec 17]•where NCLT admitted CIRP application filed by financial creditor bank-IDBI against corporate debt-or-infrastructure company JIL for non-payment of debt, on the plea of consumer-home buyers in the instant application, holding company of JIL, namely, company 3AL, was directed to deposit Rs.2000crore with Court; company JAL was further directed to deposit Rs.275crore with Registry of Court on date of hearing and pay balance sum in installments [See. 17]• Where CIRP against infrastructure company JIL has stayed but IRP was given management by Supreme Court and holding group company JAL was directed to deposit Rs.2000crore but it failed to do so, giving priority to the inclination of home buyers who sought a refund, deposit schedule was made and developer was directed not to raise demand from such home buyers towards outstanding sum [sec 17]

Edelweiss Asset Reconstruction Company Ltd. v. Synergies Dooray Automotive Ltd. [2017] (NCLT-Hyd.)

• Where financial creditor failed to provide any documentary proof to substantiate its claim that before initiation of insolvency proceedings corporate debtor assigned its debt to others to reduce creditors voting right in Committee of Creditors, application to held said assignment as invalid was to be dis-missed [Sec. 21]

IDBI Bank Ltd. v. Lanco Infotech Ltd. [2018] (NCLT-Hyd.)

• Where corporate debtor failed to repay the loan taken from financial creditor, corporate insolvency resolution process initiated by financial creditor was to be admitted [Sec.7]• Where Insolvency Resolution Professional (IRP) proposed by financial creditor had been recently appointed as IRP to two large companies and current corporate debtor itself was a large company, proposed IRP would not be able to find sufficient time to act as IRP for respondent-company and, therefore, the financial creditor was to be suggested to change aforesaid 7RP[Sec. 16]

 

Lokhandwala Kataria Construction (P.) Ltd. v. Nisus Finance and Investment Managers LLP[2018] (NCL-AT)

Before admission of an application under section 7, it is open to financial creditor to withdraw application but once it is admitted, it cannot be withdrawn [Sec. 7]

Anil Mahindroo v. Earth Iconic Infrastructure (P.) Ltd. [2018] 91 143(NCL-AT)

• Where respondent /corporate debtor undertook to pay ‘committed returns’ from date of execution of agreement till physical possession of unit was handed over to appellant, the appellant had successfully proved that money disbursed by them was against consideration for the time value of money and thus, for all-purpose, they came within the meaning of financial creditor [See. 5(8)].

Engenoius Engineering (P.) Ltd. v. Oneax Natura (P.) Ltd. [2018] (NCL-AT)

• where the appellant invested some amount with the respondent company and was allotted equity shares in a LLB canceled allotment of shares capital in favor of appellant and amount was lying with the respondent, the appellant would not come within the meaning of the financial creditor [Sec. 5(8)]• The tribunal was justified in rejecting insolvency resolution process initiated by the appellant.

 

Forech India (P.) Ltd. v. Edelweiss Assets Reconstruction Company Ltd. [2018] (NCL-AT)

• were winding up cases were pending against corporate debtor but no winding up order was passed or liquidation proceedings were initiated against the corporate debtor, financial creditor and operational creditor were free to file an application for initiation of corporate insolvency resolution process [See. 7]• Held that the financial creditor and operational creditor were free to file an application for initiation of the corporate insolvency resolution process.

IDBI Bank Ltd. v. Asian Natural Resources India Ltd. [2018] (NCLT-Ahd.)

• Where petitioner-financial creditor sanctioned working capital limits of a sum comprising of fund-based and nonfund based limit by way of an inland letter of credit to the respondent corporate debtor and inspite of repeated reminder given by the petitioner , respondent did not choose to repay amounts, since debt due to petitioner was a financial debt and petition was complete in all respect, an instant petition under section 7(5) was to be admitted. [sec.5(8)] 

Insolvency Professional

Innoventive Industries Ltd. v. ICICI Bank Ltd. [2017] 84 320/143 SCL625 (SC)

• Where once an insolvency professional is appointed to manage a company, erstwhile directors of the company who are no longer in management cannot maintain an appeal on behalf of the company [Sec. 17]• Where once an insolvency professional is appointed to manage a company, erstwhile directors of the company who are no longer in management cannot initiate an appeal on behalf of the company [See. 61]• Maharashtra Relief Undertaking (Special Provisions) Act, 1958 being repugnant to Insolvency and Bankruptcy Code could not have come in way of corporate insolvency resolution process under IBC; where appellant-corporate debtor defaulted in making payments of amounts due under credit facilities obtained from a respondent bank, an application filed by a respondent bank to initiate insolvency process had rightly been admitted [Sec. 238]For triggering sec 7(1) of IBC default could be in any FC. Non-obstante clause of IBC to prevail over Nonostante clause in MRU article 254 of the Cl 

 

Macro Leafin (P.) Ltd. v. Arrow Resources Ltd. [2018] (NCLT-New Delhi)

• Where a certificate of practice of IRP had expired pendency of the petition, application for replacement of IRP was to be accepted [ sec.16]• Held that the application for replacement of insolvency resolution professional was to be accepted as in absence of Insolvency Professional no steps could be taken to proceed with the corporate Insolvency process.

SARFAESI Act

BharatbhaiVrajlalbhaiSelani v. State Bank of India, Rajkot [2018] (NCLT-Ahd.)

•Initiation of proceedings under SARFAESI Act or pendency of proceedings before DRT is no ground for not commencing Insolvency Resolution Process, in view of overriding effect given to section 238 [sec .10]

Neeta Chemicals (I) (P.) Ltd. (NCIPL) v. State Bank of India [2017] (NCLT – Hyd.)

• Where corporate debtor without taking any steps to clear even a part of the loan, filed an application to initiate insolvency resolution process only to scuttle proceedings of SARFAESI Act initiated against it, the same was to be dismissed [Sec. 10]

Sarthak Creation (P.) Ltd. V. Bank of Baroda [2018] (NCLT-Ahd.)

• Pendency of proceedings before DRT or innovation of provisions of SARFAESI Act is no ground to not to commence Corporate Insolvency Resolution Process (sec. 10)• Application by the corporate debtor to initiate corporate insolvency resolution process was to be admitted. 

Schweitzer systemtek India (P.) Ltd. V. Phoenix ARC (P.) Ltd. [2018] (NCLT-Mum)

• Property not owned by corporate debtor does not fall within the ambit of the moratorium as per section 14 and, consequently, the moratorium shall prohibit action only against properties reflected in the balance sheet of the corporate debtor [sec 14]• SARFAESI Act may come within the ambit of moratorium if an action is to foreclose or to recover or to create any interest in respect of property belonged to or owned by a corporate debtor and not otherwise [sec 14] 

Supreme Court

Bikram Chatterji v. Union of India [2018] 92 176 (SC)

• Supreme Court directed Amrapali Builders to submit an opinion about various deficiencies in their projects and completion of those projects [Sec. 17]• NO coercive action would be taken by any authority with respect to buildings where completion was going on under order passed by the Supreme Court. 

Mothers Pride Dairy India (P.) Ltd. v. Portrait Advertising and Marketing (P.) Ltd.[2018] (SC)

• Where settlement had been entered into between parties and Supreme Court accepted said settlement, proceeding pending before National Company Law Tribunal would stand disposed of lsec-9]

Lokhandwala Kataria Construction (P.) Ltd. v. Nisus Finance and Investment Managers LLP[2018] (SC)

• where NCLT was of the view that inherent power recognized by Rule 11 of NCLAT Rules,2016 could not to be utilized by NCLAT to allow a compromise before it by parties after the admission of matter, prima facie this appeared to be correct position in law; Supreme court should take on record consent terms entered into between parties and undertaking of the appellant to abide by consent terms in toto [sec 61] 

Neelkanth Township and Construction (P.) Ltd. v. Urban Infrastructure Trusties Ltd.[2018] (SC)

• Where NCLAT held that in absence of regulation framed by Insolvency Board relating to ‘record of default’, ‘documents’, ‘record’, and ‘evidence of default’, terms prescribed in Adjudicatory Rules, 2016 would hold good to decide default of debt, appeal against the said order was to be dismissed [Sec. 3(12)]• Where debentures matured in three consecutive years, were not paid by the corporate debtors, there was a ‘default’ as defined under section 3(12) [Sec. 3(12)]• Debentures come within the meaning of financial debt [Sec. 5(8)]• Where NCLAT held that Limitation Act, 1963 does not apply to Bankruptcy Code and therefore application by financial creditor to initiate insolvency process even after 6 years couldn’t be said to be time-barred, “Supreme Court kept the question of law viz. whether Limitation Act would apply to this proceeding, open [Sec. 7] 

Era Infra Engineering Ltd. v. Prideco Commercial Projects (P.) Ltd. [2018] (NCL-AT)

• Where earlier a notice was issued to corporate debtor under section 271 of Companies Act, 2013 for winding up, same could not be treated as a notice for purpose of section 8 and in view of mandatory provision under section 8, read with rule 5 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, a demand notice was to be sent by operational creditor to corporate debtor[Sec. 8] • order passed by Adjudicating Authority accepting application of the corporate debtor initiating corporate insolvency resolution process was to be set aside.

JK Jute Mills Co. Ltd. v. surendra Trading Co. [2017] (NCL-AT)

• Nature of provisions contained in sub-section (5) of section 7 or sub-section (5) of section 9 and sub-section (4) of section JO stipulating that within 14 days of receipt of an application for initiating corporate insolvency resolution process, ‘Adjudicating Authority’ is required either to admit or to reject the application, being procedural; same cannot be treated as mandatory [Sec. 7, Sec. 9 and Sec. 10]

Kaliber Associates (P.) Ltd. v. Mrs. Tripat Kaur [2018] 92 183 (NCL-AT)

• Where before admission of the application under section 7, Adjudicating Authority had not issued any notice to corporate debtor, impugned order admitting application had been passed in violation of rules of natural justice and thus, the same was to be set aside [Sec. 7]

P.K. Ores (P.) Ltd. v. Tractors India (P.) Ltd. [2018] (NCL-AT)

• Where application preferred by a respondent-operational creditor under section 9 was admitted but no notice was given to a corporate debtor by Adjudicating Authority prior to admission of the application under section 9, the impugned order of admitting application against the corporate debtor was to be set aside [Sec. 9]

Prowess International (P.) Ltd. v. Parker Hanniiin India (P.) Ltd. [2017] (NCL-AT)

Adjudicating Authority may permit withdrawal of application on request of the applicant before its admission but it has no power to allow any applicant or any other person to withdraw the application after admission [Sec. 9]

Anark  Aluminium Ltd. V. State  Bank of India [2018] (NCLT-Hyd.)

•where corporate debtor, a special purpose vehicle(SPV) was established to take up implementation of alumina refinery for the manufacture of alumina but it could not commence commercial operations due to non-availability of raw material as state mineral development corporation APMDC had canceled ore supply agreement since the corporate debtor had not taken the matter to State Government and in view of fact huge public money had already been invested by banks and said the project had a potential of employment generation for more than 1000 employees’ application filed under section 10 to initiate insolvency resolution process was to be rejected [Sec. 10]

Anil Kumar v. Rolex Cycles (P.) Ltd. [2017] (NCLT-Chd.)

•where personnel of corporate debtor did not co-operate with Interim Resolution Professional (IRP)appointed by Tribunal, IRP would continue to function as Resolution Professional till he was replaced and would not become functus officio to stall resolution process in the petition which had been admitted by Tribunal [Sec. 19]

Axis  Bank Ltd. v.  Edu  Smart, Services (P.) Ltd. [2017] (NCLT-New Delhi)

Where CIRP was admitted against the corporate debtor and IRP invited public claims, and applicant bank invoked corporate guarantee which was given by the corporate debtor to applicant bank a few years back in restructuring and reconstitution of a sister company since CIRP commenced much prior to the date of invoking corporate guarantee by applicant bank, Resolution Professional was not able to verify applicant bank’s claim under that guarantee and, therefore, had rightly rejected applicant’s claim[Sec. 14]

Impex Ferro Tech Ltd. v. Agarwal coal Corporation (P.) Ltd. [2018](SC)

• Where after passing of the order of MCLT, the settlement was entered into between parties, the same was to be taken on record, and also undertaking of both parties to abide by consent terms was to be recorded and judgment of NCLT would accordingly be substituted by instant order [Sec. 9]

Inderpreet Singh v. Marines Buildcon India Ltd. [2018] (NCLT-New Delhi) (SB)

Where corporate debtor failed in repayment of loan with interest and debt had been acknowledged by one of directors of corporate debtor, application for initiation of corporate insolvency process was to be admitted [sec 7]

Aruna Hotels Ltd. v. N. Krishnan [2018] (NCL-AT)

• Where insolvency resolution process under section 9 was admitted on the ground that appellant-employer had not paid arrears of salaries due to ex-employees, appellant-employer pleaded that no demand notice, as required under section 8, was separately given by any of ex-employees and that all notices of ex-employees were issued by the same advocate, which were served as advocates notice, for want of valid demand notice under section 8, impugned order for initiating corporate insolvency resolution process was to be set aside [Sec. 8]

Bank of New York Mellon, London Branch v. Zenith Infotech Ltd. [2017] 78  254/140 SCL 333(SC)

• When Registrar or Secretary and Chairman of BIFR had not been conferred any power of adjudication to determine the question as to whether a company was an industrial company within the meaning of section 3(e) and 3 ft) of SICA, refusal of registration of reference on that basis was non-est in law; and reference must, therefore, be deemed to be pending on the date of commencement of Insolvency and Bankruptcy Code attracting provisions of section 252 thereof

IDBI Bank Ltd. v. BCC Estate (P.) Ltd. [2018] (NCLT-Ahd.)

Merely because the corporate insolvency process had already commenced against the principal borrower, the corporate guarantor could not avoid corporate insolvency resolution process when it fails to repay the amount borrowed by principal borrower [sec7]

Industrial & Commerce Bank of china v. Alok Industries Ltd. [2017] (NCLT-Ahd)

• Pendency of winding up proceeding before admission of insolvency proceeding would not bar either initiation or continuation of such insolvency proceedings [Sec. 7]

Macquaire Bank Ltd. v. Shilpi Cable Technologies Ltd. [2017] (SC)

• Section 9(3)(c) is a procedural provision, which is a directory in nature and, thus, in relation to operational debt provision continued in section 9(3)(c) is not mandatory; Code cannot be construed in a discriminatory fashion so as to include operational creditors who are residents outside India and happen to hank with financial institutions included under section 3(14) [See. 9]

• Where there was the availability of documentary evidence, merely because there was no copy of requisites certificate under section 9(3)(c), application to initiate CIRP could not be rejected [Sec. 9]

 

Neelkanth Township and Construction (P.) Ltd. v. Urban Infrastructure Trusties Ltd.[2017] (NCL-AT)

• Limitation Act, 1963 does not apply on Bankruptcy Code, and, therefore, application by financial creditor to initiate insolvency process even after 6 years could not be said to be time-barred(sec 9).• Limitation Act, 1963 does not apply on Bankruptcy code, and therefore application by financial creditor to intimate insolvency process even after 6 years could not be said to be time-barred. Held that since the instant application was filed to mala fide intentions to take advantage of the provisions of the Bankruptcy code, application to initiate the corporate insolvency resolution process was to be dismissed.

Nikhil Mehta & Sons v. AMR Infrastructure Ltd. [2017] (NCL-AT)

• where infrastructure company raised the amount from appellant buyers by way of sale purchasing agreement in respect of units and had agreed to pay committed returns to the appellant but d defaulted on payment, the appellant would be ‘financial creditor within the meaning of section 5(7) and due would be the debt within the meaning of section3(11) [Sec.

Sabari Inn (P.) Ltd. V. Rameesh Associates (P.) Ltd. [2017] (NCL-AT)

• Where winding-up petition filed for company’s inability to pay debts was transferred to Tribunal, but operational creditor failed to provide all details for admission of the application under section 7,8 or 9, in accordance with provisions of Transfer of pending proceedings Rules, said application was to be abated [sec 9]

 

Sanjeev Jain v. Eternity Infracon (P.) Ltd. [2017] (NCLT- New Delhi)

• Where applicant made an investment in commercial space which was under construction and said the investment was made on condition of assured return, but real estate company failed to fulfill its commitment to return on said investment, the applicant could not be treated as an operational creditor as debt in question had not arisen out of sale/ supply of any goods or rendering of services [sec. 5(20)]

 

Seema Gupta v. Supreme Infrastructure India Ltd.[2018](NCL-AT)

• It is mandatory to issue a notice under section 8 before filing of an application under section 9 to initiate insolvency resolution process [sec 8]

Shivam Water Treaters (P.) Ltd. v. Union of Indiam [2018] (SC)
The validity of composition of national company law Tribunal and the validity or constitutionality of Bankruptcy code can be challenged before Supreme court under article 32 of the constitution [sec 62]• Where High court was directed to address relief limited to any action taken by governmental authorities or any order passed by National Company Law Tribunal and barring this, High court would not address any other relief sought in prayer clause; High court cannot enter into debate pertaining to the validity of Bankruptcy code or constitutional validity of National Company Law Tribunal [sec 63] 

 

Smart Timing steel Ltd. v. National steel & Agro Industries Ltd. [2018] (NCLT-Mum)

• Where operational creditor had not filed a certificate from financial institution maintaining accounts of operational creditor confirming that there was no payment of an unpaid operational debt by the corporate debtor, its application to initiate corporate insolvency resolution process was to be rejected [sec 9] 

 

Smart Timing steel Ltd. v. National steel & Agro Industries Ltd. [2017] (NCL-AT)

• Filing of copy of the certificate from financial institution maintaining accounts of operational creditor confirming that there is no payment of the unpaid operational debt by the corporate debtor as prescribed under clause (c) of sub-section (3) of section 9 is mandatory; the argument that foreign companies having no office in India or no account in India with any financial institution will suffer in recovering debt from the corporate debtor cannot be accepted as a part from code, there are other provisions of recovery like a suit which can be preferred by any person [sec 9] 

Speculum Plast (P.) Ltd. v. PTC Techno (P.) Ltd. [2017] (NCL-AT)

• Since Bankruptcy code came into effect on 1-12-2016, right to apply for initiating insolvency process under section 7 or section 9 or section 10 accrued only after 1-12-2016; where default was committed by corporate debtor in September,2013 initiation of insolvency proceedings filed after 1-12-2016 could not be said to be time barred even though same was initiated after 3 years [sec 9] 

 

Starlog Enterprises Ltd. v. ICICI Bank Ltd.[2017] (NCL-AT)

• Only principal amount which has become due and payable to financial creditor could have been claimed as default amount under code [sec 3(12)]• Where financial creditor misrepresented material facts before adjudicating authority in order to obtain an order of admission of an application filed under section 7 and there was the conspicuous mismatch between amount demanded in demand notice and amount stated to be in said default in said application, impugned order admitting application was to be set aside. [sec 7] 

 

State Bank of India v. Essar Steel Ltd. [2017] (NCLT-Ahd.)

• Even in corporate insolvency resolution plan, debt restructuring process can be taken into consideration by committee of creditor’s as one of resolution plan, commencement of insolvency resolution process could not be constructed as putting an end to debt restructuring process [sec 7] • Where corporate debtor,i.e., ESSAR, had committed default in repayment of financial debt to banks SCB and SBI and applications under section 7 filed by  SCB and SBI were complete in all respects, application filed by SCB and SBI were to be admitted [sec 7] • Appointment of Insolvency Resolution Professional on insolvency process being commenced, would not cause prejudice to interest of company and stakeholders [sec 16] • In Insolvency Resolution process through Adjudicating Authority need not appoint IRP on same day on which admission order was passed, if admission order and order appointing Interim Resolution Professional were made separate, then corporate debtor will be able to file two appeals at two stages and, thereby, gain more time which is not object of code [sec 16] • Where different financial creditors proposed names of different IRP, one proposed by creditor having highest debt dues was to be accepted [sec 16]

 

State Bank of India v. Namdhari food International (P.) Ltd. [2017] (NCLT-New Delhi)

• Where Tribunal dismissed insolvency application due to non-appearance of the applicant, since the said application had been dismissed prior to the expiry of 14 days from date of first posting and moreover, applicant bank had acted promptly in filing the application for restoration that too within the said period of 14 days, insolvency application was to be restored subject to payment of cost [sec 9]

 

State Bank of India v. Radheshyam Fibres (P.) Ltd.[2018] (NCLT-Ahd.)

• Regulations 76 and 77 of SEBI General Regulations stipulates that all officers of the bank above grade 4 are authorized to sign plaints, affidavit; where financial creditor through its assistant General Manager filed an instant application to initiate insolvency resolution process, it could not be said that person who signed application was not the competent person [sec 7]

 

Surendra Trading co. v. Juggilal Kamlapat Jute Mills co. Ltd. [2017] (SC)

• It cannot be held that proviso to sub-section (5) of section 7 or proviso to sub-section (5) of section 9 or proviso to sub-section (4) of section 10 to remove defects within seven days in mandatory, on failure to comply with which applications are to be rejected [sec 7]

 

Unigreen Global (P.) Ltd. v. Punjab National Bank [2018] (NCL-AT)

• Where there was nothing on record to suggest that corporate applicant had filed an application under section 10 fraudulently or with malicious intent, the impugned order passed by Adjudicating Authority rejecting the said application and imposing a penalty under section 65 was to be set aside [sec 10] • Where there was nothing on record to suggest that corporate applicant had filed an application under section 10 fraudulently or with malicious intent and Adjudicating Authority before imposing penalty had not served any notice to applicant expressing intention to punish applicant, the impugned order passed by Adjudicating Authority application under section 10 and imposing penalty was to be set aside [sec 65]

 

Union Bank of India v. Era Infra Engineering Ltd., New Delhi [2017] (NCLT-New Delhi)(SB)

• Issue as to whether process under Insolvency code could be triggered in face of pendency of winding up petition was referred to larger Bench {sec 7}

 

Uttara Foods and Feeds (P.) Ltd. v. Mona Pharmachem [2018](SC)

• Where both parties agreed that matter had been settled amicably between parties, settlement was to be taken on record and order of NCLAT was to be set aside [sec 9]• In view of rule 8 of I&B (Application to Adjudicating Authority) Rules, 2016 , NCLAT, Prima facie, Adjudicating Authority could not avail of inherent powers recognized by rule 11 of NCLT Rules, 2016 so as to allow a compromise to take effect after the admission of an insolvency petition, thus, relevant Rules are to be amended by competent authority to empower NCLAT with such inherent powers to obviate unnecessary appeals being filed before supreme court [sec 61]

 

Vinod Awasthy v. AMR Infrastructure Ltd. [2017] (NCLT-New Delhi)

• Where petitioner booked a flat with a real estate company, and on company’s failure to pay assured amount of return, petitioner demanded refund of entire booking amount, petitioner neither supplied any goods nor had rendered any service to acquire status of operational creditor, hence, not eligible to file application under section 9 [sec 5(20)]

 

Vishwa Nath Singh v. Visa Drugs & Pharmaceuticals (P.) Ltd. [2018] (NCL-AT)

• Where respondent claimed to be financial creditor failed to show that loan amount was disbursed by it to corporate debtor was against consideration for time value of money, it did not come within meaning of financial creditor [sec 5(7)]

We can help in the matter of below with reference to IBC 2016

·        Corporate Insolvency Resolution Process

·        Claim Verification Team

·        Front End Team for Taking Over Control and Custody of Corporate Debtor

·        Corporate Insolvency Resolution Process

·        Team Legal Team

·        Finance and Accounts Team

·        Liquidation Process Team Resolution Plan

·        Facilitator Team Asset Sale Team

·        Human Resources Team

·        Information Technology Team

·        Support Services To Insolvency Professionals, Who Are Partners of

         Rajput Jain & Associates

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