IBC Summary of Important Rulings on Insolvency & Bankruptcy Code

Summary of Important Rulings on Insolvency & Bankruptcy Code

Summary of Important Rulings on Insolvency & Bankruptcy Code

Summary of Importants Rulings on Insolvency & Bankruptcy Code

Court:  Supreme Court  
S.no Name of Case Law Decision
1 Innoventive Industries Ltd Vs ICICI Bank and Anr.  IBC has overriding effect of all Acts. Moratorium imposed in IBC will previal aginst all other Acts
    Once IP is appointed he will replace the current management and erstwhile directors cannot maintain appeal on behalf of the company
2 Mobilox Innovations Pvt ltd Vs Kirusa Softwre Pvt Ltd  Breach of NDA is a dispute. AA must reject the application if notice of dispute has been received by operational creditor
3 Surender Trading company V/s Juggimal Kamlapat Jute Mills co. Ltd.  Time limit of 7 days given to Operational creditor by AA to rectify the defect in application is not mandatory. It can be extended on the discretion of AA
4 Alchemist ARC Ltd Vs Hotel Gaudavan Pvt Ltd.   Arbitration proceedings can not be initiated during Moratorium period
5 Arcelor Mittal India Ltd Vs Satish kumar gupta  Resolution applicant who himself is NPA should be given opportunity to present resolution plan.
6 Macquarie Bank Ltd Vs Shilpi cable technologies Ltd.  Section 9 (3)(c) is not mandatory. Assignee of debt would come under expression of Operation Creditors and disput before receipt of demand notice is a valid dispute. Petition filed by a foreign company need not observe such requirement of a statute which are impossible to comply, namely getting a certificate from Indian Financial Institution evidencing default in repayment of a debt. Petition filed by an advocate is maintainable.
7 Shivam water Treaters Pvt Ltd Vs UOI   High Court not to enter into debate of constitutional validity of this Act. Only SC can address
8 B K Educational Services Pvt Ltd. Vs Parag gupta and Associates Limitation Act is applicable to applications filed for insolvency under this Act
9 Chitra Sharma Vs UOI  Amount raised from real estate project allottees will be considered as Financial Debt
10 Jaipur Metals and Electricals  Employees orginations Vs Jaipur Metals and Electricals ltd  Winding up proceedings in Companies Act should be transferred to the NCLT
11 Swiss Ribbons Pvt LTD Vs UOI Administrative support for all tribunals should be from Ministry of Law. Even today NCLT and NCLAT are functioning under the MCA, this needs to be corrected immediately. Presently there is only 1 NCLAT bench at New Delhi. SC directed to set circuit benches. Differenciation between FC and OC is on firm ground.
12 Forech India Ltd Vs Edelweiss ARC Ltd.  Winding up proceedings in Companies Act should be transferred to the NCLT. Section 11 only bars corporate debtor from initiating a petition u/s 10 in respect of whom a liquidation order has been made. 
13 Vijay Kumar Jain Vs standard chartered bank Ltd  Erstwhile members of the Board of Directors are entitled to participate in each and every meeting held by COC. They have right to discuss along with members of COC all resolution plans that are presented at such meeting. Members of earstwhile board must be given a copy of such plan as part of documents that have to be furnished along with notice of such meeting. 
14 K. Shashidhar Vs IOB Resolution plan should be approved by requisite percentage of 66%, AA can not anlysis and evaluate the comercial decision of COC , 
15 Swaraj Infrastructure Pvt Ltd Vs Kotak Mhendra Bank Ltd.  Secured creditors who has obtained an order from the DRT and a recovery certificate has been issued, can file a winding up petition.
16 K.Kishan Vs Vijay Nirman Company PVT LTD.  Same as Mobilox. Code can not be invoked in respect of an operational debt where an arbitral award has been passed against the operational debtor.
17 Sunrise 14  V/s Ravi Mahajan. Same as Macquarie(OC) but apply on FC also. 
Court:  High Court - 

Summary of Important High Court Rulings on Insolvency & Bankruptcy Code

1 Shree Metaliks Ltd Vs UOI  Natural Justice with Corporate Debtor. Opportunity of being heard to be given to CD to contest the default before admitting the application. 
2 Cushman and wakefield India Pvt Ltd. Vs UOI  Eligibility of registration as valuer is well founded 
3 Liberty House Group  
4 Akshay Jhunjhunwala Classification of Creditors into financial and operational , made under IBC, is on reasonable ground and does not offends the provisions of constitution of India.
5 Power Grid vs Jyoti Structure Section 14 (Moratorium) would not apply to the proceddings which are in benefit of the corporate debtors. Purpose of moratorium is to keep the CD's assests intact during CIRp and ensure the CD as going concern. Arbitration proceedings in benefit of CD should be continued. Once Mortorium start decions on continue the objection of CD needed to be taken only by IRP 
6 Jotun India Pvt Ltd Vs PSL Ltd Companies Act should be treated as general law while IBC is Special law. Therefore IBC being Later enactmentand in view of the objects and purpose for which it was enacted, the provisions relating to revival/resolution of the company will have to be given primacy over the provision of the winding up proceeding pending before the company courts.
7 Dr. Vidya Sagar Garg Vs IBBI  Registration of IRP can be rejected by IBBI Board on the ground that a FIR has been registered against him and thus he was not a fit and proper person to be registered as IRP
8 Leo Edibles and Fats Ltd Vs The Tax recovery Officer  HC holds that Income Tax Department can not claim any priority merely because of the fact that the order of attachment issued by him was long prior to the initiation of liquidation proceedings. Liquidation rules clearly indicates that Liquidation assets may or may not be in possession of CD, including but not limited to encumbered assets. Therefore even if order of attachment was issued by IT deptt. constitute an encumberance on the property, it still does not have the effect of taking out of the purview of section 36 (3) (b).
Court:  NCLAT

Summary of Important NCLAT Court Rulings on Insolvency & Bankruptcy Code

1 Edelweiss ARC vs Synergies Dooray Assignment of Debt to NBFC is valid and proposed merger and amalgamation of the companies in resolution plan is valid.
2 Consolidated Engineering 10% of total debt outstanding for the purpose of representation in COC shall be based on the debt figure checked and approved by IRP. If claim found by IRP is below 10% of total debt, OC has no right to claim representation. However NCLAT allowed the authorised representative of OC to watch the proceedings without any interference in proceedings of CC
3 EXIM Bank and PFC Jointly Shares were pledged with banks. The shareholders has right to decide whether approving or disapproving the CIRP process by Corporate applicant u/s 10. Such right does not stand curtailed by Deed of Pledge.
4 Rajendra Bhuta RP vs MHADA Joint Development agreement of MHADA land with CD does not give any right to CD. Land belongs to MHADA and was not formally tfd in favour of CD. Hence it can not be treated to be the assets of the CD.
5 Gammon India Partners in firm are all companies. If partners are company and amount due is from partnership firm therefore CIRP can not be initiated
6 S C Sekran Vs Amit Gupta Liquidator may sell the CD as a going concern.
7 Era Infra Engg Demand notice of 10 days by operational creditor is compulsory. AA can not admit the application pending this.
8 Ferro Alloy Corporation Ltd Appeal filed by suspended board is not maintainable. It is not necessary to initiate CIRP against Principal Borrower before initiating CIRP against the Corporate Guarantor. However simultaneously two proceedings against Principal Borrower and Corporate guarantor are not maintainable.
9 Dr. Vishnu Agrawal V/s Piramal CIRP proceedings can be initiated against Corporate guarantor if the principal borrower is not a Corporate person. CIRP can not be initiated against two Corporate Gurantors simultaneously. 
10 Ashok B Jiwrajka CIRP initiated against holding company and subsidiary company are two separate proceedings and both can be continued.
11 EXIM v/s CHL  
12 Cannra Bank Vs Deccan Chronicle Holidings Ltd  Once moratorium is declared any suit pending in Supreme Court or high court can not be initited. However Consitution of India under Article 32 and 226 has given right to Supreme Court and High Court which supersede all acts and moratorium in that case will not be applicable.
13 Tata Steel Ltd v/s Liberty COC can call for and consider improved financial offers. IRP has powers in consultation with COC to extend timelines for obtaining best resolution plan for the company but with in overall timelines of IBC code
Court:  NCLT

Summary of Important NCLT Court Rulings on Insolvency & Bankruptcy Code

1 Amtek Auto Ltd  Certain period can be excluded from the total period of 270 days. However no scope of extension beyond 270 days.
2 Sterling SEZ and infratructure Ltd.  The AA under PMLA does not have jurisdiction to attach the properties of the CD undergoing CIRP. RP can take charge of the properties of Corporate Debtor and deal with them under IBC. Moratorium and overriding power u/s 238 comes into play alongwith section 63 which mentions that civil court will not have any Jurisdiction where the matter is pending before NCLT/NCLAT. 
3 SBI VS ARGL and SBI VS ARGL Provision of moratorium shall not apply to transactions notified by Central Govt or the supply of essential goods and services to CD. IRP shall follow all functions properly under IBC and all personeels of CD shall extend full support to him.
4 Essar Steel Asia Holding Ltd. V/s Satish kr. Gupta 90% approval of COC required for withdrawal u/s 12 of IBC
5 Koteshwar Rao Karuchola Section 28 defines which decisions to be taken by COC by 66%. Rest all decisions are taken by 51% approval. Appointment of forensic auditor does not fall in that list . Therefore 51% voting is sufficient.
6 Edelweiss ARC  Ltd. Vs AML Steel & power Ltd.   Exclusion of certain time period from CIRP since the RP could not perform duties due to factory being located in Naxalite Area. Held that RP made genuine efforts and therefore in view of this extraordinary situation unutilised period of CIRP should be excluded.
7 Belthangady taluk rubber Grovers marketing & processing Co-oprtaing society Ltd Vs falcon Tyres Ltd.  No hard and fast rule for payment of fees to IRP but is based on facts and circumstances of each and every case.
8 SBI VS Coastal Projects Ltd  Resolution plan submitted before the COC has not been seriously dealt with in the time frame given. Due to laxity the chances of revival are blocked. No futher extension beyond 270 days will be given.
9 Merchem Ltd (Ms Nitrex Chemicals India Ltd Vs Ravindra beleyur and Ors ) Opportunity should be given to Resolution applicant to attend the meeting of COC in which his plan is being considered. Though he will not have any opportunity to Vote
10 Affinity Finance Services Ltd Vs Kiev Finance Ltd  There is no provision in IBC for AA to review and recall its own order
11 SSA and CO  
12 Rakesh Pandey V/s JHV Distilleries and sugar Mills Ltd and another  COC has not taken any interest in completing the resolution plan. Therefore no option but to liquidate
13 SKDJ Dream Homes FC gave loan in contravention to compnies Act provision. Therefore will not be treated as FC
14 Karpagam Spinners Pvt Ltd and Anr Section 238 of IBC shall override all acts including Income Tax and EPFO etc
15 SIDBI Vs Tirupati Jute Industries Ltd  Legislation has not given the AA with authority to analyse or evaluate the commercial decision of COC. Approved plan should be in accordance with section 30 (2) otherwise order for liquidation need to pass ( K Sashidharan Vs IOB(SC)
16 Asset Recontruction Co (india) Ltd Vs Shivam Water Treaters Pvt LTD  Punishment for misconduct by CD with 3-5 year Jail and Rs. 1-100 lacs fine. Passed order to Police Comm. To help RP in taking possession of Assets and hand it over to RP.
17 Edelweiss ARC LTD Vs Bharti Defence and infrasticture Ltd  Only Genuine/financially Capable/Serious players to participate in the resolution process and to prohibit bidders who dragged on the proceedings unnecessarily.

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